micro economics test 2
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A firm will maximize total revenue if it sells its product at a price that corresponds to:
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a point below the midpoint of the demand curve.
a point above the midpoint of the demand curve.
the midpoint of the demand curve.
the point at which the demand curve crosses the vertical axis.
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a point below the midpoint of the demand curve.
a point above the midpoint of the demand curve.
the midpoint of the demand curve.
the point at which the demand curve crosses the vertical axis.
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Terms in this set (176)
A firm will maximize total revenue if it sells its product at a price that corresponds to:
Please choose the correct answer from the following choices, and then select the submit answer button.
a point below the midpoint of the demand curve.
a point above the midpoint of the demand curve.
the midpoint of the demand curve.
the point at which the demand curve crosses the vertical axis.
Please choose the correct answer from the following choices, and then select the submit answer button.
a point below the midpoint of the demand curve.
a point above the midpoint of the demand curve.
the midpoint of the demand curve.
the point at which the demand curve crosses the vertical axis.
the midpoint of the demand curve.
At the midpoint of the demand curve the elasticity is equal to one. The firm will maximize total revenue if it sells at the price that corresponds to that point.
At the midpoint of the demand curve the elasticity is equal to one. The firm will maximize total revenue if it sells at the price that corresponds to that point.
Which type of supply curve is more elastic?
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long-run supply curve
medium-run supply curve
short-run supply curve
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long-run supply curve
medium-run supply curve
short-run supply curve
long-run supply curve
In the long run, plant capacity and the number of firms can change. This is illustrated with an elastic supply curve. While firms have some ability to adjust output in the short run, they have a greater ability to adjust in the long-run.
In the long run, plant capacity and the number of firms can change. This is illustrated with an elastic supply curve. While firms have some ability to adjust output in the short run, they have a greater ability to adjust in the long-run.
What will happen to the quantity demanded of a perfectly inelastic product when its price increases by 5%?
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Quantity demanded will increase by 5%.
Quantity demanded will decrease by 5%.
Quantity demanded will drop to zero.
Quantity demanded will stay the same.
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Quantity demanded will increase by 5%.
Quantity demanded will decrease by 5%.
Quantity demanded will drop to zero.
Quantity demanded will stay the same.
Quantity demanded will stay the same.
For products with perfectly inelastic demand, quantity demanded does not change when price changes.
For products with perfectly inelastic demand, quantity demanded does not change when price changes.
What happens to price elasticity on a linear demand curve when the price increases above the unitary elasticity point?
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It becomes more elastic.
It becomes more inelastic.
It becomes more unitary elastic.
It stays the same.
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It becomes more elastic.
It becomes more inelastic.
It becomes more unitary elastic.
It stays the same.
Elastic supply curves:
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are vertical.
always pass through the origin.
always cross the quantity axis.
always cross the price axis.
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are vertical.
always pass through the origin.
always cross the quantity axis.
always cross the price axis.
always cross the price axis.
Elastic supply curves always cross the vertical or price axis.
Elastic supply curves always cross the vertical or price axis.
If grapefruits have a price elasticity of 4, that means for every 1% decrease in price, quantity demanded will increase by:
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4%.
0.4%.
1%.
25%.
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4%.
0.4%.
1%.
25%.
Montblanc produces pens that sell for hundreds of dollars. In general, the demand for Montblanc pens as compared with Bic pens would be:
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more upward sloping.
more inelastic.
unitary elastic.
more elastic.
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more upward sloping.
more inelastic.
unitary elastic.
more elastic.
Assume that the price elasticity of demand for T-shirts is unitary elastic. If a surf shop increases the price of its T-shirts, what will happen to the total revenue from T-shirt sales?
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Total revenue will fall to zero.
Total revenue will stay the same.
Total revenue will decrease.
Total revenue will increase.
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Total revenue will fall to zero.
Total revenue will stay the same.
Total revenue will decrease.
Total revenue will increase.
The ______ is defined as a period when plant capacity and the number of firms in an industry cannot change.
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medium run
short run
long run
market period
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medium run
short run
long run
market period
Assume that a firm is selling its product at the price that corresponds to the midpoint of its demand curve. If the firm increases the price of its product, what will happen to total revenue?
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It will stay the same.
It will increase.
It will decrease.
It will fall to zero.
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It will stay the same.
It will increase.
It will decrease.
It will fall to zero.
If Susan's income increases by 20% and, as a result, she buys 40% more lattes, then:
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income elasticity of demand for lattes is 0.5.
income elasticity of demand for lattes is 2.
price elasticity of demand for lattes is 0.5.
price elasticity of demand for lattes is 2.
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income elasticity of demand for lattes is 0.5.
income elasticity of demand for lattes is 2.
price elasticity of demand for lattes is 0.5.
price elasticity of demand for lattes is 2.
For which of the following industries is supply most elastic in the long run?
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airlines
Hollywood movies
Coffee shops
nuclear power
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airlines
Hollywood movies
Coffee shops
nuclear power
If the price of gasoline increases by 10% and the quantity demanded falls by 2%, then what is the price elasticity of demand for gasoline?
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5
20
2
0.2
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5
20
2
0.2
Complements are defined as having a(n):
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income elasticity of demand greater than 1.
zero cross elasticity of demand.
negative cross price elasticity of demand.
positive cross price elasticity of demand.
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income elasticity of demand greater than 1.
zero cross elasticity of demand.
negative cross price elasticity of demand.
positive cross price elasticity of demand.
Assume that a firm is selling its product at the price that corresponds to the midpoint of its demand curve. If the firm decreases the price of its product, what will happen to total revenue?
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It will fall to zero.
It will stay the same.
It will increase.
It will decrease.
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It will fall to zero.
It will stay the same.
It will increase.
It will decrease.