A shoe manufacturer wants to maximize its total revenue. When the manufacturer charges $25 per shoe, consumers demand 50 shoes per day. The manufacturer knows that the demand for shoes is highly elastic. In the given scenario, which of the following statements is true?
a. To maximize total revenue, the manufacturer should decrease the price of its shoes, because the percentage increase in quantity demanded will more than offset the decrease in price.
b. To maximize total revenue, the manufacturer should decrease the price of its shoes, because the percentage increase in quantity demanded will not offset the decrease in price.
c. To maximize total revenue, the manufacturer should increase the price of its shoes, because the increase in price will more than offset the decrease in quantity demanded.
d. To maximize total revenue, the manufacturer should increase the price of its shoes, because the increase in price will not offset the decrease in quantity demanded.
a
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Refer to Table 11.1. If the marginal propensity to import increases to 0.5 (mpi = 0.5), what is the new equilibrium level of output?
A) 568.00 B) 760.00 C) 946.67 D) 1,266.67
The national debt is the amount
A) by which government outlays exceed tax revenue in a given year. B) by which government tax revenue exceed outlays in a given year. C) of government outlays summed over time. D) of debt outstanding that arises from past budget deficits. E) of all future entitlement spending.
Suppose there is a labor shortage. Wages will ____ and the SRAS curve will shift ____
a. rise; left b. fall; left c. fall; right d. rise; right
To determine the price level and aggregate output, the aggregate demand and aggregate supply must
A. intersect. B. be considered as a multiplier. C. be disregarded. D. be considered separately.