Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should
a. increase the price charged to vacationers and decrease the price charged to business travelers.
b. decrease the price charged to vacationers and increase the price charged to business travelers.
c. decrease the price to both groups of customers.
d. increase the price for both groups of customers.
b
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Suppose that there are only three consumers of a product. At a price of $6 per unit, the first consumer would buy 12 units of the product, the second consumer would buy 8 units, and the third consumer would buy 3 units of the product
If you drew a market demand curve for this product, the quantity demanded at a price of $6 would be A) 23 units. B) 20 units. C) 12 units. D) 11 units.
Ben N. Jerry prefers to keep his $10,000 retirement savings buried in the backyard. After an increase in the price level, Ben reduces the amount of goods and services he wants to purchase. Ben's rationalization, that now his retirement savings won't buy as much, is consistent with which explanation of the aggregate demand curve's negative slope?
a. the interest rate effect b. the open economy effect c. the inflation effect d. the wealth effect
A critical assumption made by all economic models is that
a. few economic decision makers face constraints under capitalism b. few economic decision makers face constraints under communism c. every economic decision maker, except the extremely wealthy, faces constraints d. every economic decision maker, except the federal government, faces constraints e. every economic decision maker faces constraints under every economic system
A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output. The price of labor is $200 per unit and the price of capital is $100 per unit. At these input levels, another unit of labor adds 400 units to output and another unit of capital adds 600 units to output. The firm
A. is minimizing the cost of producing 2,000 units of output. B. could produce 6 more units of output at the same cost by switching $1 from labor to capital. C. could produce 4 more units of output at the same cost by switching $1 from labor to capital. D. could keep output constant and reduce cost by using more capital and less labor. E. both c and d