12. Bob's Barbershop manager has calculated the marginal revenue is Ksh 200 and marginal cost is $250. What should she do to maximize profit? A. expand output. B. do nothing without information about your fixed costs. C. reduce output until marginal revenue equals marginal cost. D. expand output until marginal revenue equals zero. E. reduce output beyond the level where marginal revenue equals zero. 13. People's average incomes fall from £1,000 a week to £600 a week. As a result, demand for potatoes increases from 1 million tonnes to 1.2 million tonnes a week. The income elasticity of demand for potatoes is A. -0.25 В. 0.6 С. -0.5 D. -2 14. If the price of a good with a price elasticity of supply of 2.5 increases by 10%, the quantity supplied will: A. Fall by 25% B. Rise by 25% C. Fall by 40% D. R ise by 0.4% 15. A firm facing a perfectly price elastic demand curve, ceteris paribus A. can sell all it produces only by lowering its price below the market price. B. can raise its price and not lose all its customers. C. will sell the same amount regardless if it raises or lowers the price it charges. D. will have zero quantity demanded if it raises its price above the market price

12. Bob's Barbershop manager has calculated the marginal revenue is Ksh 200 and marginal cost is $250. What should she do to maximize profit? A. expand output. B. do nothing without information about your fixed costs. C. reduce output until marginal revenue equals marginal cost. D. expand output until marginal revenue equals zero. E. reduce output beyond the level where marginal revenue equals zero. 13. People's average incomes fall from £1,000 a week to £600 a week. As a result, demand for potatoes increases from 1 million tonnes to 1.2 million tonnes a week. The income elasticity of demand for potatoes is A. -0.25 В. 0.6 С. -0.5 D. -2 14. If the price of a good with a price elasticity of supply of 2.5 increases by 10%, the quantity supplied will: A. Fall by 25% B. Rise by 25% C. Fall by 40% D. R ise by 0.4% 15. A firm facing a perfectly price elastic demand curve, ceteris paribus A. can sell all it produces only by lowering its price below the market price. B. can raise its price and not lose all its customers. C. will sell the same amount regardless if it raises or lowers the price it charges. D. will have zero quantity demanded if it raises its price above the market price

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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