A reduction in the price charged for luncheon specials by a downtown cafeteria will
A) affect the demand (curve) for that cafeteria's luncheons if its competitors react.
B) have no effect on the demand for lunch at other downtown restaurants.
C) increase the cafeteria's gross revenue from lunch business.
D) increase the cafeteria's net revenue from lunch business if the demand is elastic.
E) increase the cafeteria's net revenue from lunch business if the demand is inelastic.
A
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"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect?
What will be an ideal response?
Economics is most precisely defined as
A) a study of what people need to survive. B) a study of how culture evolves in different geographic areas. C) the same as the study of finance and management. D) the study of how people make choices.
Think of the firms and industries that are familiar to you—how many firms in the industry, what their cost structures may look like—and decide which among them is least likely to be a natural monopoly
a. a professional football franchise in Toledo, Ohio b. a pharmaceutical firm that produces a life-saving drug after 10 years of research investment c. a public utilities firm, such as an electric power company d. a high school in a small rural Kentucky town e. an alternative rock band
Figure 4-7
Refer to . The supply curve S1 and the demand curve D indicate initial conditions in the market for gasoline. A $.60-per-gallon excise tax on gasoline is levied, which shifts the supply curve from S1 to S2. Which of the following states the actual burden of the tax?
a.
$.50 for buyers and $.10 for sellers
b.
$.50 for sellers and $.10 for buyers
c.
The entire $.60 falls on sellers.
d.
The entire $.60 falls on buyers.