An early frost in the vineyards of Napa Valley would cause a(n)
a. increase in the demand for wine, increasing price.
b. increase in the supply of wine, decreasing price.
c. decrease in the demand for wine, decreasing price.
d. decrease in the supply of wine, increasing price.
d
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A shoe manufacturer wants to maximize its total revenue. When the manufacturer charges $25 per shoe, consumers demand 50 shoes per day. The manufacturer knows that the demand for shoes is highly elastic. In the given scenario, which of the following statements is true?
a. To maximize total revenue, the manufacturer should decrease the price of its shoes, because the percentage increase in quantity demanded will more than offset the decrease in price. b. To maximize total revenue, the manufacturer should decrease the price of its shoes, because the percentage increase in quantity demanded will not offset the decrease in price. c. To maximize total revenue, the manufacturer should increase the price of its shoes, because the increase in price will more than offset the decrease in quantity demanded. d. To maximize total revenue, the manufacturer should increase the price of its shoes, because the increase in price will not offset the decrease in quantity demanded.
Refer to the diagram. At output level Q average fixed cost:
A. is equal to EF.
B. is equal to QE.
C. is measured by both QF and ED.
D. cannot be determined from the information given.