Jack, a music major, is perusing Jill's notes for her economics class, where she has written that "total revenues will rise with price rises only if demand is elastic." Jack tells Jill this is nonsense because firms can always increase their revenues by raising price. How should Jill respond?
Jill should point out that her statement is correct. If a firm raises price when demand is elastic, the percentage fall in quantity demanded will be greater than the percentage rise in price. As a result, total revenues (price times quantity) will fall. On the other hand, if the firm raises price when demand is inelastic, the percentage fall in quantity demanded will be less than the percentage rise in price. The result will be an increase in revenue.
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When exchange rates are not determined in the market but are instead set by a country's central bank, we say that the country's exchange rate is
A) fixed. B) a real exchange rate. C) flexible. D) a nominal exchange rate.
The firm's demand curve for labor is
A. the demand curve for the good produced divided by the price of the good. B. the marginal physical product curve for labor divided by the price of the good. C. the marginal revenue product curve for labor. D. the marginal physical product curve for labor multiplied by the price of labor.
Why is the economic analysis of oligopoly so difficult? What two generalizations can be made about the pricing behavior of monopolists?
What will be an ideal response?
Refer to the data. Total fixed cost is:
A. $6.25.
B. $100.00.
C. $150.00.
D. $50.00.