Answered: Assume that the price elasticity of…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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Question

Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to:
decrease.
increase.
remain constant.
either increase or remain constant, depending upon the size of the price increase.

A price elasticity of zero corresponds to a demand curve that is:
horizontal.
downward sloping with a slope always equal to 1.
vertical.
either vertical or horizontal.

As we move down along a linear demand curve, the price elasticity of demand becomes more:
elastic.
Inelastic.
linear.
variable.

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