If demand is inelastic, a reduction in price will lead to a drop in total revenue.
Answer the following statement true (T) or false (F)
True
It is true that total revenue will fall when a company puts an item on sale and demand is inelastic. For example, a grocery store can put salt on sale, but so few consumers will respond to the sale that the percentage change in price outweighs the percentage change in quantity, pulling down revenues.
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Compared to an economy that uses a medium of exchange, in a barter economy
A) transaction costs are higher. B) transaction costs are lower. C) liquidity costs are higher. D) liquidity costs are lower.
What is the Lucas critique, and why was it so important to macroeconomists in the 1970s?
What will be an ideal response?
Refer to Figure 12.5. If exchange rates are floating, an expansionary monetary policy would best be represented by a movement from ________ in panel (a) and a corresponding movement from ________ in panel (b)
A) point A to point B; point X to point Y B) point C to point A; point X to point Y C) point D to point C; point Y to point X D) point B to point D; point Y to point X
An increase in U.S. income relative to other countries' incomes will
a. decrease the supply of dollars on the foreign exchange market b. increase the demand for dollars on the foreign exchange market c. decrease the demand for dollars on the foreign exchange market d. increase the supply of dollars on the foreign exchange market e. increase the price of exports