If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
A. raise prices 1 percent.
B. lower prices 1 percent.
C. raise prices until the elasticity becomes very high.
D. keep the price where it is.
Answer: D
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Refer to the scenario above. If they are the only bidders in the auction, Jeff will win the auction if ________
A) Tom and Roger bid up to their value for the good while Bill and Jeff bid below their value of the good B) Tom and Jeff bid up to their value for the good while Roger and Bill bid below their value for the good C) Bill and Jeff bid up to their value for the good while Tom and Roger stop bidding at $100 and $200, respectively D) each of them bids up to his value for the good
Which one of the following statements is TRUE for BOTH perfect competition and monopolistic competition?
A) Each type of firm faces a downward sloping demand curve. B) Each type of firm produces a homogeneous product. C) In the long run, firms in both industries make zero economic profit. D) Each type of firm competes on product quality and price.
As the market price of a good falls, consumer surplus: a. falls
b. rises. c. does not change. d. can either fall, rise, or stay the same.
A supply curve that is parallel to the price axis is
A) perfectly elastic. B) perfectly inelastic. C) relatively inelastic. D) unitary elastic.