For a linear demand curve, where is the amount of total expenditures on a good maximized?
What will be an ideal response?
For a linear demand curve, total expenditures are maximized at the midpoint of the demand curve. At this point, price elasticity of demand equals one. Above this point, demand is elastic, which means total expenditures increase when price falls. Below this points, demand is inelastic and total expenditures increase when price increases. Hence, expenditures are maximized when elasticity is one.
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Which of the following statements best describes allocative efficiency?
a. As additional increments of resources are added to producing a good or service, the marginal benefit from those additional increments will decline. b. when it is impossible to produce more of one good (or service) without decreasing the quantity produced of another good (or service) c. when a country can produce a good at a lower cost in terms of other goods; or, when a country has a lower opportunity cost of production d. when the mix of goods being produced represents the mix that society most desires
Suppose a manager's preferences depend only on profit. Such a manager will then have an indifference curve that: 
A. is tangent to the profit curve at a quantity exactly equal to 2.5. B. is tangent to the profit curve somewhere between quantities of 0 and 2.5. C. intersects the profit curve at a quantity exactly equal to 5. D. is tangent to the profit curve somewhere between quantities of 2.5 and 5.