At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:
A. perfectly elastic, as is the perfectly competitive firm's.
B. elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic.
C. elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly inelastic.
D. inelastic, while a perfectly competitive firm's demand curve is perfectly elastic.
Answer: B
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The demand curve is: QD = 500 - 1/2 P
a. Calculate the (point) price elasticity of demand when price is $100. Is demand elastic or inelastic? b. Calculate the (point) price elasticity of demand when price is $700. Is demand elastic or inelastic? c. Find the point at which point elasticity is equal to -1.
If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should
a. use more fertilizers and weed killers to increase their yields. b. plant additional acres to increase their output. c. reduce the number of acres they plant to decrease their output. d. Both a and b are correct.