Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?
A) The price elasticity of demand can be used to determine the impact of changes in income on quantity sold.
B) Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit.
C) The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.
D) Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change.
C
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Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused
A) scarcity because there are less oranges now than people want. B) scarcity because people have to switch to other types of citrus fruits. C) a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. D) a shortage because the orange growers will have less income.
Which of the following statements about natural monopolies is true?
A) Natural monopolies are only found in the markets for natural resources (like crude oil and coal). B) For natural monopolies, marginal cost is always below average cost. C) For natural monopolies, average cost is always increasing. D) Natural monopolies cannot be regulated.