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Chapter 2 - Revenue of the Firm

Chapter 2 – Revenue of the Firm

True-False Questions

1.The demand function for a firm relates the quantities of a product or service that consumers would like to purchase during some specific period to the variables which influence consumer decisions to buy the good or service.

TruePage 40 – Demand Function Difficulty: E

  1. The demand function for a firm relates how the quantities of a product or service that consumers would like to purchase during some specific period is influenced by variables such as the price of a firm's products, the prices of related goods, consumers' incomes, the season of the year, and dollars spent on advertising.
TruePage 40 – Demand FunctionDifficulty: E

3.A demand curve is a curve or line showing the relation between the quantity demanded per time period of a good or service and various possible prices of that good or service.

TruePage 41 – Demand CurveDifficulty: D

  1. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the QX equation is QX = 13,400 + 250Px.

FalsePage 42 – Demand FunctionDifficulty: M

  1. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the QX equation is QX = 13,400 - 250Px.

TruePage 42 – Demand FunctionDifficulty: M

  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the QX equation is

QX = 8550 – 100PX.

TruePage 42 – Demand FunctionDifficulty: M

  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the QX equation is

QX = 1050 – 100PX.

False Page 42 – Demand FunctionDifficulty: M
  1. Total revenue is the total dollar sales of a firm during some particular time period and is equal to the price of a product multiplied by the quantity sold.
TruePage 43 – Total RevenueDifficulty: E

9. Average revenue is the revenue received per unit of product sold.

TruePage 44 – Average RevenueDifficulty: M

  1. Average revenue is equal to total revenue divided by quantity sold.

TruePage 44 – Average RevenueDifficulty: E

11.Average revenue is equal to price if all units are sold at the same price.

TruePage 45 – Average RevenueDifficulty: M

12. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the average revenue equation is:

AR = 53.6 - .004QX.

TruePage 45 – Average RevenueDifficulty: M

13. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the average revenue equation is:

AR = 13.6 - .004QX.

FalsePage 45 – Average RevenueDifficulty: M

14.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the price equation is

PX = 85.50 – .01QX.

TruePage 45 – Average RevenueDifficulty: M

15.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the average revenue equation is AR = 58.85 – .01QX.

FalsePage 45 – Average RevenueDifficulty: M

16.Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the total revenue equation is:

TR = 53.6QX - .004QX2.

TruePage 45 – Total RevenueDifficulty: M

17. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the total revenue equation is:

TR = 53.6QX -.004QX.

FalsePage 45 – Total RevenueDifficulty: M

18.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the total revenue equation is

TR=85.5QX - .01QX2.

True Page 45 – Total RevenueDifficulty: M

19.Marginal revenue is the rate of change of total revenue with respect to price.

FalsePage 47 – Marginal RevenueDifficulty: M

20.Marginal revenue is the rate of change of total revenue from selling one more unit of the product.

TruePage 47 – Marginal RevenueDifficulty: M

21. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the marginal revenue equation is:

MR = 53.6-.008QX

True Page 48 – Marginal RevenueDifficulty: M

22. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the marginal revenue equation is:

MR = 53.6-.004QX2

False Page 48 – Marginal RevenueDifficulty: M

23. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 – .02QX.

TruePage 48 – Marginal RevenueDifficulty: M

24.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 – .01QX2.

FalsePage 48 – Marginal RevenueDifficulty: M
25.Technically, arc marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

FalsePage 49 – Marginal RevenueDifficulty: D

  1. Technically, marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

True Page 49 – Marginal RevenueDifficulty: D

  1. Arc marginal revenue measures the average rate of change of total revenue with respect to quantity sold over some range of output.

True Page 49 – Arc Marginal RevenueDifficulty: E

28. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, marginal revenue will be zero where Q = 6700.

TruePage 51 – Marginal RevenueDifficulty: D

29. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, marginal revenue will be zero where

Q = 13,400.

FalsePage 51 – Marginal RevenueDifficulty: D

30. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 4275.

True Page 51 – Marginal RevenueDifficulty: D

31. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 8550.

False Page 51 – Marginal RevenueDifficulty: D

32.Since the average revenue curve gives the relationship between price and quantity demanded for a firm,. The average revenue curve is also the firm’s demand curve.

TruePage 51 – Average Revenue Difficulty: E

33. Marginal revenue at a specific quantity is the slope of the total revenue curve at that quantity demanded.

True Page 51 – Marginal RevenueDifficulty: E

34. Given the demand function of QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the maximum total revenue that can be attained is $179,560.

TruePage 54 – Total RevenueDifficulty: D

35. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, the maximum total revenue that can be attained is $118,240.

FalsePage 54 – Total RevenueDifficulty: D
  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 for a total of $182.756.25.
TruePage 54 – Total RevenueDifficulty: D
  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 and Q = 4275.
TruePage 54 – Total RevenueDifficulty: M

38. Determinants of demand for a given good or service are demand function variables other then its own price.

True Page 55 – Determinants of DemandDifficulty: E

39. Any demand function variable that will cause a demand curve to shift is usually called normal good.

False Page 55 – Determinants of Demand Difficulty: M

40.If an individual consumer purchases more of a good when his or her income increases, that good is said to be a normal good.

TruePage 56 – Normal GoodDifficulty: E

41.If an individual consumer purchases less of a good when his or her income increases, that good is said to be a normal good.

FalsePage 56 – Normal GoodDifficulty: M

42.If an individual consumer purchases less of a good when his or her income increases, that good is said to be an inferior good.

True Page 56 – Inferior GoodDifficulty: E
  1. Frozen yogurt and ice cream are complementary goods.

FalsePage 56 – Substitute GoodDifficulty: E

  1. A substitute good is a good that can be used in place of some other good.

TruePage 56 – Substitute GoodDifficulty: E

  1. Suits and ties are substitute goods.

FalsePage 56 – Complementary GoodDifficulty: E

  1. Complementary goods are generally used with one another.

True Page 56 – Complementary GoodDifficulty: E

  1. Determinants of supply are those variables other than a good’s own price that change the quantity of the good that sellers are willing and able to sell.

True Page 57 – Determinants of Supply Difficulty: E

48. The responsiveness of the quantity demanded to a change the product's own price is the price elasticity of demand.

TruePage 60 – Price Elasticity of DemandDifficulty: M
  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000. For the range from PX = $60.00 to PX = $75.00, the arc price elasticity of demand is –3.75.

TruePage 60 – Price Elasticity of DemandDifficulty: D

  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000. For the range from PX = $60.00 to PX = $75.00, the arc price elasticity of demand is - 7.05.

FalsePage 60 – Price Elasticity of DemandDifficulty: D

51.If the absolute value of the price elasticity of demand is 0, then the quantity demanded is unitary elastic with respect to price.

FalsePage 61 – Price Elasticity of DemandDifficulty: M

52.If the absolute value of the price elasticity of demand is less than 1, then the quantity demanded is inelastic with respect to price.

True Page 61 – Price Elasticity of Demand Difficulty: E

53.If the absolute value of the price elasticity of demand is greater than 1, then the quantity demanded is elastic with respect to price.

True Page 61 – Price Elasticity of DemandDifficulty: M

54.If the absolute value of the price elasticity of demand is less than 1, then the quantity demanded is elastic with respect to price.

False Page 61 – Price Elasticity of DemandDifficulty: M

55.If the absolute value of the price elasticity of demand is greater than 1, then the quantity demanded is inelastic with respect to price.

True Page 61 – Price Elasticity of DemandDifficulty: M

56.Given the following price and quantity demanded of good X, we know that demand for good X is inelastic over this range.

Price X / Quantity X
400 / 5,000
300 / 6,000

TruePage 61 – Price Elasticity of DemandDifficulty: D

  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PX = $60.00 PY = $40.00. I = $2500, and A = $5,000. When price of good X is increased to $75.00, we know that demand for good X is elastic.

TruePage 61 – Price Elasticity of DemandDifficulty: D

58. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PX = $60.00 PY = $40.00. I = $2500, and A = $5,000. When price of good X is increased to $75.00, we know that demand for good X is inelastic.

FalsePage 61 – Price Elasticity of Demand Difficulty: D

59.The responsiveness of the quantity demanded to a change in the value of the income variable in the demand function is the income elasticity of demand.

TruePage 71- Income Elasticity of DemandDifficulty: M

60.If the increase in the dollar volume of an individual consumer's purchases of a good is greater than the dollar volume increase in his or her income, then that good is said to be a superior good.

FalsePage 71 – Income Elasticity of DemandDifficulty: D

61.Given the following income and quantity demanded for good X, we know that this good is a superior good.

Income / Quantity X
45,000 / 25
60,000 / 50

TruePage 71 – Income Elasticity of DemandDifficulty: D

62.The responsiveness of the quantity demanded to a change in the value of the price of a related product contained in the demand function is the cross price elasticity of demand.

TruePage 72 – Cross Price ElasticityDifficulty: M

  1. Based on the following price and quantity demanded information for goods X and Y, these goods are complementary goods.

Price X

/ Quantity X / Price Y / Quantity Y
6 / 32 / 10 / 12
6 / 40 / 15 / 9

FalsePage 72 – Cross Price ElasticityDifficulty: D

Multiple Choice Questions:

  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, what is the equation of the demand curve for X?
  2. QX = 1500 – 100PX
  1. QX = 1500 + 100PX
  2. QX = 8550 – 100PX
  3. QX = 8550 + 100PX
  4. QX= 4275 – 100PX

Correct Answer: CPage 42 – Demand FunctionDifficulty: M

2. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, what is the equation of the demand curve for X?

  1. QX = 5000 – 250PX
  1. QX = 5000 + 250PX
  2. QX= 8550 – 250PX
  3. QX = 13,400 – 250PX
  4. QX = 13,00 + 250PX

Correct Answer: DPage 42 – Demand FunctionDifficulty: M

3.The price of a firm's product times the quantity demanded of that product is:

  1. total revenue

b. marginal revenue

c.the firm's demand curve

d.price elasticity of demand

e.average revenue

Correct Answer: APage 43 – Total RevenueDifficulty: E

4.If all units of a product are sold at the same price, then the firm's total revenue divided by the quantity demanded is equal to:

a.marginal revenue

b.the firm's demand curve

c.the product's price

d.price elasticity of demand

e.total average revenue

Correct Answer: CPage 44 – Average RevenueDifficulty: M

  1. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, what is the price equation?
  2. PX = 15 - .01QX
  1. PX = 15 + 100QX
  2. PX = 85.50 – 100QX
  3. PX = 85.50 - .01QX
  4. PX= 85.5 + .01QX

Correct Answer: DPage 45 – Price EquationDifficulty: M

6. Given the demand function QX = 5,000 – 250PX +120PY +.04I where PY = $50.00 and I = $60,000, what is the price equation of the demand curve for X?

  1. PX = 20 - .004QX
  1. PX = 20 + .004QX
  2. PX = 53.6 – .004QX
  3. PX= 53.6 + .004QX
  4. noneof the above

Correct Answer: CPage 45 – Price EquationDifficulty: M

7.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, what is the total revenue equation?

  1. TR = 15QX - .01QX2
  2. TR = 15QX +.01QX2
  3. TR = 85.5 – .01QX
  4. TR = 85.5 + .01QX2
  5. TR = 85.5QX - .01QX2

Correct Answer: EPage 45 – Total Revenue EquationDifficulty: D

8.Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, what is the total revenue equation?

  1. TR = 20QX - .004QX2
  2. TR = 20QX +.004QX2
  3. TR = 53.6 – .008QX
  4. TR = 53.6QX - .004QX2
  5. TR = 53.6 + .004QX2

Correct Answer: DPage 45 – Total Revenue EquationDifficulty: D

9. The rate of change of total revenue from selling one more unit of a product is its:

a.average revenue

b.the firm's demand curve

c.price elasticity of demand

  1. total revenue
  2. marginal revenue

Correct Answer: EPage 47 - Marginal RevenueDifficulty: E
10.Fill in the table for Arc marginal revenue:

  1. 50, 30, 20, 0, -20,
  2. 100, 80, 60, 40, 20
  3. 90, 70, 50, 30, 10
  4. 70, 50, 30, 20, 0
  5. 120, 100, 80, 60, 40

Correct Answer: CPage 47 – Marginal RevenueDifficulty: M

11. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, what is the marginal revenue equation?

  1. MR = 15 - .01QX2
  2. MR = 15 +.02QX
  3. MR = 85.5 – .02QX
  4. MR = 85.5 + .01QX2
  5. MR = 85.5 - .02QX2

Correct Answer: CPage 48 – Marginal Revenue Equation Difficulty: D

12. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, what is the marginal revenue equation?

  1. MR = 20 - .004QX2
  2. MR = 20 +.008QX
  3. MR = 53.6 - .004QX2
  4. MR = 53.6 – .008QX

e. MR = 53.6 + .008QX2

Correct Answer: DPage 48 – Marginal Revenue Equation Difficulty: D

13.Fill in the following table for Total Revenue (TR):

  1. 0, 2700, 4800, 6300, 7200
  2. 0, 500, 3800, 5500, 6700
  3. 900, 5500, 6800, 7200, 7500
  4. 250, 2200, 3300, 4500, 7200
  5. 0, 1000, 3000, 4600, 5800

Correct Answer: APage 43&49 – Total RevenueDifficulty: D

14.Fill in the following table for total revenue (TR):

  1. 0, 450, 700, 950, 1000
  2. 0, 350, 500, 850, 1100
  3. 0, 450, 800, 1050, 1200
  4. 550, 700, 850, 1050, 1250
  5. 0, 550, 800, 950, 1100, 1250

Correct Answer: CPage 43&49 – Total RevenueDifficulty: D

15.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, at what quantity of good X will marginal revenue equal zero?

  1. 2575
  2. 4275
  3. 6725
  4. 8550
  5. 10,171

Correct Answer: BPage 51 – Marginal RevenueDifficulty: D

16.Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, at what quantity of good X will marginal revenue equal zero?

  1. 2144
  2. 3420
  3. 5500
  4. 6700
  5. 7244

Correct Answer: DPage 51 – Marginal RevenueDifficulty: D

17.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, what is the maximum total revenue that can be attained?

  1. $82,567.52
  2. $182,756.25
  3. $296,256.73
  4. $365,512.5
  5. none of the above

Correct Answer: BPage 54 – Total RevenueDifficulty: D

18.Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000, what is the maximum total revenue that can be attained?

  1. $79,650
  2. $156,567
  3. $179,560
  4. $227,657
  5. none of the above

Correct Answer: CPage 54 – Total RevenueDifficulty: D

19.Which of the following statements regarding arc elasticities is FALSE?

a.the arc elasticity approximates point elasticity.

b.arc elasticities do not measure responsiveness; only point elasticities do this.

c.arc elasticities do NOT use derivatives in their calculations.

d.arc elasticities are elasticities calculated between two points or two values of a variable.

e.the arc elasticity refers to the average responsiveness of Qx.

Correct Answer: BPage 59 – Arc Elasticity Difficulty: D

20.Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000. When price of good X is increased from $60.00 to $75.00, what is the arc price elasticity of demand for good X over this range?

  1. 7.05
  2. –7.05
  3. 9.08
  4. –9.08
  5. none of the above

Correct Answer: EPage 60 – Price ElasticityDifficulty: D

21. Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000. When the price of good X is increased from $30.00 to $40.00, what is the arc price elasticity of demand for good X over this range?

  1. 2.88
  2. –1.88
  3. –2.995
  4. 2.995
  5. none of the above

Correct Answer: BPage 60 – Price ElasticityDifficulty: D

22.Which of the following statements regarding arc elasticities is TRUE?

a.the arc elasticity value is exactly equal to point elasticity.

b.arc elasticities do not measure responsiveness; only point elasticities do this.

c.arc elasticities use derivatives in their calculations.

d.arc elasticities are elasticities calculated between two points or two values of a variable.

e.the arc elasticity measures the responsiveness of Qx to extremely small changes in the value of an independent variable.

Correct Answer: DPage 60 – Arc ElasticityDifficulty: D

23. Given the demand function QX = 1500 – 100PX + 75PY + 1.5I + .06A where PY = $40.00, I = $2500, and A = $5,000. When price of good X is increased from $60.00 to $75.00, we know that demand for good X over this range is:

  1. elastic
  2. inelastic
  3. unitary elastic
  4. unresponsive to price changes
  5. none of the above

Correct Answer: APage 61 – Price ElasticityDifficulty: D

24.Given the demand function QX = 5,000 – 250PX +120PY +.04I where

PY = $50.00 and I = $60,000. When the price of good X is increased from $30.00 to $40.00, we know that demand for good X over this range is:

  1. elastic
  2. inelastic
  3. unitary elastic
  4. responsive to price changes
  5. a and d

Correct Answer: EPage 61 – Price ElasticityDifficulty: D

25. You raised the price of your good by 20% and the quantity demanded declined by 40%. Demand is:

a.elastic.

b.inelastic.

c.unitary elastic

d.completely elastic

e.completely inelastic

Correct Answer: APage 61 – Price ElasticityDifficulty: M

26. You raised the price of your good by 40% and the quantity demanded declined by 20%. Demand is:

a.elastic.

b.inelastic.

c.unitary elastic

d.completely elastic

e.completely inelastic

Correct Answer: BPage 61 – Price ElasticityDifficulty: M

27.If the quantity demanded does not change with respect to price, then:

a.the demand curve is infinitely elastic.

b.the demand curve is unitary elastic.

c.thedemandcurveiscompletelyinelastic.

d.the demand curve is in its inelastic range.

e.the demand curve is in its elastic range

Correct Answer: CPage 62 – Completely Inelastic Difficulty: E

28. If a firm loses all of its sales when it raises its price above the going market price, then:

a.the demand curve is infinitely elastic.

b.the demand curve is unitary elastic.

c.thedemandcurveiscompletelyinelastic.

d.the demand curve is in its inelastic range.

e.the demand curve is in its elastic range

Correct Answer: APage 62 – Infinitely Elastic Difficulty: E

29. You raised the price of your good by 40% and the quantity demanded did not change. Demand is:

a.completely elastic and a decline in price would have yielded a total revenue decrease.

b.completely inelastic and a decline in price would have yielded a total revenue increase.

c.completely elastic and a decline in price would have yielded a total revenue increase.

  1. completely inelastic and a decline in price would have yielded a total revenue decrease.
  2. unitary elastic and a decline in price would have yielded a total revenue decrease.

Correct Answer: DPage 62 – Completely InelasticDifficulty: D

30.You raised the price of your good by 40% and the quantity demanded did not change. Demand is:

a.elastic.

b.inelastic.

c.unitary elastic

  1. completely elastic
  2. completely inelastic

Correct Answer: EPage 62 – Completely InelasticDifficulty: M

31.If the absolute value of the price elasticity of demand is greater than 1, then:

a.an increase in price increases total revenue

b.an increase in price has no affect total revenue.

c.a decrease in price lowers total revenue.

d.adecreaseinpriceraisestotalrevenue.

e.a change in price has no affect on total revenue.

Correct Answer: DPage 65 – Price ElasticityDifficulty: M

32. If the absolute value of the price elasticity of demand is less than 1, then:

a.an increase in price decreases total revenue

b.an increase in price has no affect total revenue.

c.a decrease in price lowers total revenue.

d.adecreaseinpriceraisestotalrevenue.

e.a change in price has no affect on total revenue.

Correct Answer: CPage 65 – Price Elasticity Difficulty: M

33.If the absolute value of the price elasticity of demand for good X is greater than1, then:

a.X is a complementary good.

  1. X is a substitute good.
  2. X is an superior good

d.demandfor X issaidtobeinelastic.

e.demandfor X issaidtobeelastic.

Correct Answer: EPage 65 – Price ElasticityDifficulty: M

34.A firm just increased the selling price of its product. Total revenue decreases. Which of the following is correct?

a.demand is elastic

b.demand is inelastic

c.demand is unitary elastic.

d.the product is a normal good.

e.the product is a superior good.

Correct Answer: APage 65 – Price ElasticityDifficulty: M

35.A firm just decreased the selling price of its product. Total revenue decreases. Which of the following is correct?

a. demand is elastic.

b. demand is inelastic.

c.demand is unitary elastic.

d.the product is a normal good.

e.the product is an inferior good.

Correct Answer: BPage 65 – Price ElasticityDifficulty: M

36.A firm just decreased the selling price of its product. Total revenue increases. Which of the following is correct?

a. demand is elastic

b.demand is inelastic.

c.demand is unitary elastic.

c.the product is a normal good.

e.the product is a superior good.

Correct Answer: APage 65 – Price ElasticityDifficulty: M