If a price decrease of a product significantly raises its revenues, then the absolute price elasticity of demand for that product must be
A. an example of unit elasticity.
B. greater than one.
C. less than one.
D. equal to one.
Answer: B
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If a perfectly competitive firm produces an output level at which price is greater than marginal cost, then the firm should:
A. leave its output decision unchanged because it is earning a profit. B. employ more fixed factors of production. C. expand output to earn greater profits or smaller losses. D. reduce output to earn greater profits or smaller losses.
Which of the following will tend to result in the least variation in the expected real rate of return from the ownership of stocks?
A) ownership of stocks from a specific sector (for example, the technology sector) over a lengthy period of time B) ownership of a single stock over a lengthy period of time C) ownership of a single stock for a short period of time D) ownership of a diverse set of stocks (the Standard & Poor's 500, for example) over a lengthy period of time