A firm's market constraints include the conditions under which it can
A) convert inputs into outputs.
B) buy its inputs and sell its outputs.
C) issue stock.
D) produce the inputs to production.
B
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A perfectly inelastic demand curve indicates that
a. a producer can sell as many units as desired at the market price but no units above the market price. b. for a given percent change in price, the quantity demanded rises by the same percentage. c. price has no effect on the quantity demanded. d. the percent change in price is less than the percent change in quantity demanded.
Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 0.7. If the firm decreases the product price:
A. the demand becomes more inelastic and total revenue increases. B. the demand becomes more inelastic and total revenue decreases. C. the demand becomes less inelastic and total revenue increases. D. the demand becomes less inelastic and total revenue decreases.