Explain the relationship between price elasticity of demand and total revenue
What will be an ideal response?
If demand is elastic, an increase in price reduces total revenue, and a decrease in price increases total revenue.
If demand is inelastic, an increase in price increases total revenue, and a decrease in price decreases total revenue.
If demand is unit elastic, a change in price (either up or down) does not affect total revenue.
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A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is
a. zero. b. the prime rate. c. the discount rate. d. the federal funds rate. e. the required reserve ratio.
When a union raises the wage above the equilibrium level, it reduces the quantity of labor supplied and raises the quantity of labor demanded, resulting in unemployment
a. True b. False Indicate whether the statement is true or false