The value of price elasticity of demand is more likely to be above 1 if:
a. consumers have a long time to adjust to a price change.
b. the product is a necessity.
c. demand is inelastic.
d. there are few close substitutes for the product.
e. total revenue declines in response to a price reduction.
a
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Your U.S.-based company is selling parts to a company in Chile and the company will pay you 9.8 million pesos in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$
A) you earn additional profit. B) the Chilean company will end up paying more for the goods. C) the Chilean company will end up paying less for the goods. D) you earn less profit.
A vertical merger involves a combining of one or more firms:
A. as the result of one firm purchasing the assets of the other. B. that are operating in entirely different industries. C. operating at different stages of the production process in a particular industry. D. operating at the same stage of the production process.