Demand is said to be inelastic when
A. the absolute value of the price elasticity of demand exceeds 1.
B. an increase in price results in a reduction in total revenue.
C. a reduction in price results in an increase in total revenue.
D. a reduction in price results in a decrease in total revenue.
Answer: D
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A formal agreement among the firms in an industry to coordinate their production and pricing decisions in order to earn monopoly profits is known as
a. price discrimination b. the kinked demand curve c. monopolistic competition d. a cartel e. joint competition
Assuming the economy is in a recession, Keynesian economists predict that: a. wages will remain fixed
b. monetary policy will sell government securities. c. higher wages will shift the short-run aggregate supply curve leftward. d. lower wages will shift the short-run aggregate supply curve rightward.