What happens to total revenue associated with a linear demand curve as price falls?
What will be an ideal response?
At first total revenue increases as demand is elastic, then total revenue reaches a maximum where price elasticity is unit elastic and finally total revenue falls as demand is inelastic.
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The change in price that results from a rightward shift in demand will be greater if
A) the supply curve is horizontal than if the supply curve is upward sloping. B) the supply curve is relatively steep than if the supply curve is relatively flat. C) the supply curve is upward sloping than if the supply curve is vertical. D) the supply curve is horizontal than if the supply curve is vertical.
The person who assumes the risks and uncertainties of business is
a. a manager of the business b. an owner of the business c. an excellent example of human capital d. an entrepreneur e. key to production, but not a factor of production
What impact did the change in housing prices during 2002 to 2005 have within the framework of the AD/AS model?
a. Declining housing prices reduced aggregate demand shifting AD leftward. b. Rising housing prices increased aggregate demand shifting AD rightward. c. Rising housing prices led to increased construction shifting LRAS leftward. d. Declining housing prices caused SRAS to shift leftward.
The quantity sold in a market will decrease if the government
a. decreases a binding price floor in that market. b. increases a binding price ceiling in that market. c. increases a tax on the good sold in that market. d. All of the above are correct.