The president of a toy company asks you for advice about whether the company should cut the price of its best-selling doll this year based on the following information: last year the company cut the price of its best-selling doll by 10% and the total
revenues from doll sales increased by 10%.
Please provide the best answer for the statement.
The total revenue test indicates that the price elasticity of demand for the doll in last year’s price range was unit elastic, or 1. If the firm cuts the doll’s price this year, then it will most likely put the price of the doll in the inelastic range of demand, and thus a percentage change in price will lead to a greater percentage change in quantity in this range, causing total revenues to fall. You should advise the president not to cut the price because the firm is maximizing its total revenue.
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Suppose an economy experiences a permanent increase in its expected inflation rate. As a result, there is
A) a downward shift of the short-run Phillips curve. B) a downward movement along the short-run Phillips curve. C) an upward movement along the short-run Phillips curve. D) no change at all to the short-run Phillips curve. E) an upward shift of the short-run Phillips curve.
WTO talks in the late 1990s led to openings in both financial services and telecommunications
Indicate whether the statement is true or false