Answer the following questions true (T) or false (F)
1. If a firm's goal is to maximize revenue, it will price its product to correspond to the unit-elastic segment of its demand curve.
2. When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic.
3. If the price elasticity of demand is unit elastic, a 10 percent increase in price will result in a 10 percent increase in revenue.
1. TRUE
2. FALSE
3. FALSE
You might also like to view...
When developing countries borrow in international credit markets, many find that they must borrow in currencies other than their own (such as dollars, yen, or euros). Why are international creditors willing to make loans in dollars, yen, or euros but not in the developing countries' currencies?
A) Lenders are not well-informed about developing countries' economic situations. B) Lenders believe that the currencies of developing countries will always appreciate. C) Lenders receive higher interest rates on loans in dollars, yen, or euros than on loans made in the currencies of developing countries. D) Lenders believe that developing countries have a history of weak macroeconomic management and imprudent monetary and fiscal policies.
The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?