For a linear demand curve, where is the amount of total expenditures on a good maximized?
What will be an ideal response?
For a linear demand curve, total expenditures are maximized at the midpoint of the demand curve. At this point, price elasticity of demand equals one. Above this point, demand is elastic, which means total expenditures increase when price falls. Below this point, demand is inelastic and total expenditures increase when price increases. Hence, expenditures are maximized when elasticity is one.
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The above table gives data for the nation of Mojo. At what level of real GDP is the economy at equilibrium expenditure?
A) $3.0 trillion B) $9.0 trillion C) more than $12.0 trillion. D) $6.0 trillion E) $12.0 trillion
Refer to the table below. If Fresh Laundry is currently producing 4 quality units, to maximize profit, Fresh Laundry should ________ the number of quality units as the current quality marginal revenue is ________ than its marginal cost.
Fresh Laundry is a firm that produces laundry detergent. The table above summarizes Fresh Laundry's product quality marginal revenue and marginal cost at various quality levels.
A) decrease; greater
B) increase; greater
C) decrease; less
D) increase; less
In economics, the latin phrase "Ceteris Paribus" means:
(a) "The market is at equilibrium". (b) "Invisible hand". (c) "Profit maximisation is the goal". (d) "All else being equal".
The reason the production possibilities curve is bowed outward (concave) is
A) the law of increasing additional cost. B) that technology is constantly changing. C) that the number of resources is increasing. D) that the economy has more capital goods than entrepreneurial effort.