Elasticity provides a guide to both
A. market stability and change in revenue as price changes.
B. responsiveness of quantity demanded to a change in price and market stability.
C. responsiveness of quantity demanded to a change in price and change in revenue as price changes.
D. technological change and change in revenue as price changes.
Answer: C
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A firm sees its marginal revenue increase by $20 and marginal cost increase by $15 when it produces its 1000th product. This implies
a. the production of the 1000th unit of output increases the firm's profit by $5. b. The firm is past its profit maximizing output c. We cannot say much on the profitability of the firm d. Producing the 1000th item will in fact decrease the overall firm's profits.
Consider an oligopoly that has two firms, one with a 75 percent market share and the other with a 25 percent market share. The Herfindahl index for this market is:
a. 5,625. b. 6,250. c. 625. d. 5,000. e. 8,500.
The percentage of U.S. families below the poverty line is approximately
a. 5 percent b. 10 percent c. 25 percent d. 45 percent e. 65 percent
Economists suggest that a market can fail if
A. no market for the product exists. B. governments dictate prices. C. producers get smaller profits than they desire. D. consumers have to pay more than they want to.