MCQ 7 A firm is considering whether to adjust the price it charges for units of output, but it first needs to know how the quantity of output sold and total revenue will be affected. The firm employs a statistician to examine the structure of demand and she estimates that the price elasticity of demand for the firm's product lies somewhere between - 0.25 and -0.75. If this estimate is correct, we can deduce that: A an increase in price will generate a reduction in the quantity of output sold and a fall in total revenue a reduction in price will generate an increase in the quantity of output sold and a rise in total revenue an increase in price will generate a reduction in the quantity of output sold, but the uncertainty connected with the estimate of price elasticity implies that it is C not possible to determine whether total revenue will rise or fall D a reduction in price will generate an increase in the quantity of output sold and a fall in total revenue E a reduction in price will generate an increase in the quantity of output sold but total revenue will not change F I do not want to answer this question.
MCQ 7 A firm is considering whether to adjust the price it charges for units of output, but it first needs to know how the quantity of output sold and total revenue will be affected. The firm employs a statistician to examine the structure of demand and she estimates that the price elasticity of demand for the firm's product lies somewhere between - 0.25 and -0.75. If this estimate is correct, we can deduce that: A an increase in price will generate a reduction in the quantity of output sold and a fall in total revenue a reduction in price will generate an increase in the quantity of output sold and a rise in total revenue an increase in price will generate a reduction in the quantity of output sold, but the uncertainty connected with the estimate of price elasticity implies that it is C not possible to determine whether total revenue will rise or fall D a reduction in price will generate an increase in the quantity of output sold and a fall in total revenue E a reduction in price will generate an increase in the quantity of output sold but total revenue will not change F I do not want to answer this question.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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