If total revenues decline when the market clearing price increases, then we know that
A) demand is inelastic.
B) demand is elastic.
C) demand is unit-elastic.
D) demand has zero elasticity.
Answer: B
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Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $10, we would expect that
A) price will increase until quantity demanded equals quantity supplied. B) demand will decrease until quantity demanded equals quantity supplied. C) supply will increase until quantity demanded equals quantity supplied. D) there will be no change in the price since the market is in equilibrium.
If the foreign exchange rate for 1 Hungarian forint is 0.5 cent, then
A) a dinner priced at 400 forints will cost $20. B) a wine that sells for 600 forints will cost $3,000. C) a Big Mac hamburger priced at 50 forints will cost $1. D) a hotel room renting for 40,000 forints will cost $200.