ME 1st Test

The minimum wage is an example of a government imposed A) price control. B) price ceiling. C) price floor. D) Both A and B E) Both A and C

Both A and C

________ risk involves variation in returns due to the ups and downs of the economy, the industry and the firm. A) Structural B) Fluctuational C) Business D) Financial

Business

If the price of a substitute increases, which of the following is most likely to happen in the market for the product under consideration in the short run? A) Supply will increase. B) Firms will leave the market. C) Firms will devote more variable inputs in the production of this good. D) Firms will devote less variable inputs in the production of this good.

Firms will devote more variable inputs in the production of this good.

Which of the following will not cause the demand curve for good X to shift? A) a change in the price of X B) a change in the price of Y, a complement C) a change in the price of Z, a substitute D) an increase in average disposable real income

a change in the price of X

A perfectly elastic demand curve A) can be represented by a line parallel to the vertical axis. B) is a 45-degree line. C) can be represented by a line parallel to the horizontal axis. D) cannot be represented on a two-dimensional graph.

can be represented by a line parallel to the horizontal axis.

In the short run, a change in the equilibrium price will A) always lead to inflation. B) cause a shift in the demand curve. C) cause a shift in the supply curve. D) cause a change in the quantity demanded or supplied.

cause a change in the quantity demanded or supplied.

Which of the following is the best example of the "traditional process"? A) commercial bank mergers B) minimum age limits for the purchase of alcoholic beverages C) auctioning U.S. Treasury bills D) colleges and universities give admissions preferences to children of alumni

colleges and universities give admissions preferences to children of alumni

Firms are organized to keep their costs as low as possible by A) comparing external transactions costs with internal operating cost. B) analyzing supply and demand conditions. C) minimizing their use of borrowed funds. D) utilizing the latest technology.

comparing external transactions costs with internal operating cost.

Two goods are ________ if the quantity consumed of one increases when the price of the other decreases. A) normal B) superior C) complementary D) substitute

complementary

When purchases of tennis socks decline following an increase in the price of tennis sneakers (other things remaining equal), the relationship between these two items can be described as A) substitutable. B) complementary. C) unique. D) ordinary.

complementary.

The sensitivity of the change in quantity consumed of one good to a change in the price of a related good is called A) cross-elasticity. B) substitute elasticity. C) complementary elasticity. D) price elasticity of demand.

cross-elasticity.

If the demand for a good is price inelastic and the good price is increased, then the marginal revenue (MR) received by the seller will A) not change. B) decrease. C) increase. D) Cannot be determined from this information

increase.

Remembering that demand elasticity is defined as the percentage change in quantity divided by the percentage change in price, if price decreases and, in percentage terms, quantity rises more than price has dropped, total revenue will A) increase. B) decrease. C) remain the same. D) either increase or decrease.

increase.

The best example of an economic goal of a firm is A) providing good products/services to its customers. B) improving its public image. C) increasing employee morale. D) increasing shareholder wealth.

increasing shareholder wealth.

If the price of a good is increased and total revenue received from the sale of this good increases, then the price elasticity of demand for the good is A) elastic. B) inelastic. C) unitary. D) None of the above

inelastic.

Financial risk occurs due to variations in returns which A) is induced by leverage. B) is due to the ups and downs of the economy. C) is due to changes in government regulations. D) is a result of changes in exchange rates.

is induced by leverage.

A critical element of entrepreneurship (as opposed to managerial skills) is A) leadership skills. B) risk taking. C) technology. D) political skills

risk taking.

In the text, the key question in the "economics of a business" is A) whether the need to grow revenues is being met. B) should the firm be in the business in which it is operating. C) whether the firm faces rising labor costs. D) can the firm affect its market share.

should the firm be in the business in which it is operating.

Which of the following refers to a shift in the demand curve? A) "This new advertising campaign should really increase our demand." B) "Let's drop our price to increase our demand." C) "We dare not raise our price because our demand will drop." D) "If new sellers enter the market, the demand for the product is bound to increase."

"This new advertising campaign should really increase our demand."

Which of the statements below best illustrates the use of the market process in determining the allocation of scarce resources? A) "Let's make this product because this is what we know how to do best." B) "We should consider shifting to products where we can earn even more money." C) "Everyone is opening video stores, why don't we?" D) "We can't stop making this product. This product gave our company its start."

"We should consider shifting to products where we can earn even more money."

Suppose the price of beans rises from $1.00 a pound to $2.00 a pound, quantity demanded falls from 10 units to 6 units, the coefficient of elasticity of demand for beans using the arc elasticity approach is A) -1.33. B) -0.75. C) -0.4. D) -0.25.

-0.75.

The owner of a produce store found that when the price of a head of lettuce was raised from 50 cents to $1, the quantity sold per hour fell from 18 to 8. The arc elasticity of demand for lettuce is A) -0.56. B) -1.15. C) -0.8. D) -1.57.

-1.15.

Suppose the price of crude oil drops from $150 a barrel to $120 a barrel. The quantity bought remains unchanged at 100 barrels. The coefficient of price elasticity of demand in this example would be A) -0.5. B) infinity. C) -1.0. D) 0.

0.

Which of the following statements is false? A) An increase in demand causes equilibrium price and quantity to rise. B) A decrease in demand causes equilibrium price and quantity to fall. C) An increase in supply causes equilibrium price to fall and quantity to rise. D) A decrease in supply causes equilibrium price to rise and quantity to rise.

A decrease in supply causes equilibrium price to rise and quantity to rise.

Which of the following would lead to a short-run market surplus for tomatoes? A) The price of tomatoes increases. B) A new government study shows that tomatoes have a greater risk of contamination from salmonella. C) An increase in the price of potatoes. D) A decrease in the number of tomato growers.

A new government study shows that tomatoes have a greater risk of contamination from salmonella.

A large corporation's profit objective may not be profit or wealth maximization, because A) stockholders have little power in corporate decision making. B) management is more interested in maximizing its own income. C) managers are overly concerned with their own survival and may not take all prudent risks. D) All of the above

All of the above

One of the weaknesses in pursuing the objective of profit maximization is that it ignores A) the timing of cash flows. B) the time-value of money concept. C) the riskiness of cash flows. D) All of the above

All of the above

The calculation of stockholder wealth involves A) the time-value of money concept. B) the cash flow stream. C) business and financial risk. D) All of the above

All of the above

Transaction costs include A) costs of negotiating contracts with other firms. B) cost of enforcing contracts. C) the existence of asset-specificity. D) All of the above

All of the above

A fall in the price of pesticide use in the production of cotton will A) decrease the supply of cotton, causing the supply curve of cotton to shift to the left. B) increase the supply of cotton, causing the supply curve of cotton to shift to the left. C) cause a downward movement along the supply curve of cotton. D) have no effect on the supply of cotton. E) None of the above

None of the above

From the standpoint of a soft drink company the question of "What goods and services should be produced?" is best represented by which of the following decisions? A) whether or not to hire additional workers B) whether or not to increase its advertising C) whether or not to shut down selected manufacturing facilities D) None of the above are examples.

None of the above are examples

The switch to the use of ethanol in gasoline is driven primarily by its relatively lower price. Assuming a competitive market, what effect would this change have on the equilibrium price and output for gasoline? A) Price rises, output falls. B) Price falls, output rises. C) Price rises, output rises. D) Price falls, output falls.

Price falls, output rises.

Which of the following indicates that there is a shortage in the market? A) Demand is rising. B) Demand is falling. C) Price is rising. D) Price is falling.

Price is rising.

Which of the following instances will total revenue or receipts decline? A) Price rises and demand is inelastic. B) Price falls and demand is elastic. C) Price rises and demand is elastic. D) Price falls and demand is unit elastic.

Price rises and demand is elastic.

Which of the following applies most generally to supply in the long run? A) Average total cost must decline. B) Producers are able to make change in all their factors of production. C) Producers are only able to make change in their variable factors of production. D) All original producers will leave the market.

Producers are able to make change in all their factors of production.

________ maximization is achieved when a company manages its business in such a way that its cash flows over time, discounted at the appropriate discount rate, will cause the value of the company's common stock to be at a maximum. A) Profit B) Stockholder wealth C) Asset D) None of the above

Stockholder wealth

Which of the following is the best example of the "command" process? A) United Airlines buys Northwest Airlines. B) Striking auto workers force General Motors to shut down its factories. C) Banks raise their fees on late payments by credit card holders. D) The FCC requires local telephone companies to provide access to their local networks before being able to offer long distance service.

The FCC requires local telephone companies to provide access to their local networks before being able to offer long distance service

Which of the following best describes the "guiding function" of price? A) In response to a surplus or shortage in two markets, price serves as a "guiding function" by decreasing in one market and increasing in the other market in the short run. B) The guiding function of price is the movement of resources into or out of markets in response to a change in the equilibrium price of a good or service. C) The guiding function of price occurs when the market price changes to eliminate the imbalance between supply and demand caused by a shortage or surplus at the original price. D) The guiding function usually occurs in the short run while the rationing function usually occurs in the long run.

The guiding function of price is the movement of resources into or out of markets in response to a change in the equilibrium price of a good or service.

Which of the following examples best illustrates the concept of derived demand? A) An increase in the price of beef results in an increase in the demand for fish. B) The higher the demand for automobiles, the greater the demand for steel. C) The demand for Pepsi varies directly with the price of Coke. D) The demand for a good varies inversely with its price.

The higher the demand for automobiles, the greater the demand for steel.

Which of the following would cause a short-run decrease in the quantity supplied of personal computers? A) The price of CPUs decreases. B) The price of software decreases. C) The number of PC manufacturers decreases. D) The cost of manufacturing PCs decreases.

The price of CPUs decreases.

Which of the following would cause a decrease in the demand for fish? A) The price of red meat increases. B) The price of fish increases. C) The price of chicken decreases. D) The number of fishing boats decreases.

The price of chicken decreases.

Which of the following best applies to the distinction between the "long run" and the "short run"? A) The short run is a period of approximately 1-6 months while the long run is any time frame which is longer. B) In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market. C) The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. D) All of the above statements are correct.

The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon.

Which of the following would indicate that price is temporarily above its market equilibrium? A) There are a number of producers who are left with unwanted inventories. B) There are a number of customers who are looking for a good but cannot find sellers. C) New firms decide to enter the market. D) The government must step in and impose a tax on the good.

There are a number of producers who are left with unwanted inventories.

Which of the following will change only the quantity demanded of oranges? A) an increase in the population B) a change in the price of tangerines C) a change in the price of oranges D) a decrease in the taste and preferences for oranges

a change in the price of oranges

Which of the following will not cause a short-run shift in the supply curve? A) a change in the number of sellers B) a change in the cost of resources C) a change in the price of the product D) a change in future expectations

a change in the price of the product

Which of the following will result in a decrease in demand for residential housing in the short run? A) a decrease in the price of lumber B) an increase in the wages of carpenters C) a decrease in real household incomes D) a decrease in the prices of residential housing

a decrease in real household incomes

In the short-run if there is a surplus in the market for a product, the rationing function of price can be expected to cause A) an increasing shift in the demand for the product. B) a decreasing shift in the supply of the product. C) an increase in the market price of the product. D) a decrease in the market price of the product.

a decrease in the market price of the product.

Which of the following can result in a decrease in the demand for I-Pods in the short run? A) a decrease in the population B) a decrease in real household incomes C) a decrease in the price of MP4s D) All of the above

a decrease in the population

The "law" of demand can be best described by A) people will buy things that they enjoy. B) if incomes rise, people will buy more. C) a rise in price will cause shortages. D) a fall in price will increase quantity demanded.

a fall in price will increase quantity demanded.

Financial risk is associated with changes in A) the demand for a firm's products. B) a firm's debt. C) a firm's labor costs. D) government regulations of a firm's activities.

a firm's debt.

The guiding function of price is A) the movement of price to clear the market of any shortages or surpluses. B) the use of price as a signal to guide government on the use of market subsidies. C) a long-run function resulting in the movement of resources into or out of markets. D) the movement of price as a result of changes in the demand for a product.

a long-run function resulting in the movement of resources into or out of markets.

If government imposes a price ceiling on a good that is below the market equilibrium price A) a surplus will develop. B) a shortage will develop. C) producers will reduce their sales price. D) consumers will reduce their demand for the good.

a shortage will develop.

A good that is similar to another, and can be consumed in place of it, is called A) a normal good. B) an inferior good. C) a complementary good. D) a substitute good.

a substitute good.

When a government imposes a price floor on a good that is above the market equilibrium price A) a surplus will develop. B) a shortage will develop. C) producers will increase their sales price. D) consumers will increase their demand for the good.

a surplus will develop.

A firm earns a normal profit when its total revenues just offset both the ________ cost and ________ cost. A) accounting; opportunity B) accounting; replacement C) historical; replacement D) explicit; accounting

accounting; opportunity

A firm's "normal profit" is best characterized by the A) average of a firm's profits over the past five years. B) amount of profit necessary to keep the price of a firm's stock from changing. C) amount of profit a firm could earn in its next best alternative activity. D) the average amount of profit earned in the firm's industry.

amount of profit a firm could earn in its next best alternative activity.

Which of the following could cause a long-run shift in demand as part of the "guiding function of price"? A) a change in tastes and preferences B) an increase in price caused by a shift in supply C) income shift caused by an economic recession D) an increase in number of buyers

an increase in price caused by a shift in supply

Which of the following would cause a leftward shift in the demand curve for a good? A) an increase in income B) an increase in the price of a complementary good C) an increase in the price of a substitute D) the expectation that there will be a shortage in the availability of the good

an increase in the price of a complementary good

Which of the following would cause a decrease in the price of a good? A) an increasing shift in the supply of a good and no shift in demand B) a decreasing shift in the supply of a good and no shift in demand C) an increasing shift in the demand for good and no shift in supply D) an increasing shift in the demand for good and a decreasing shift in supply

an increasing shift in the supply of a good and no shift in demand

In the long run if there is a shortage in the market for a product, the guiding (allocation) function of price can be expected to cause A) an increasing shift in the demand for the product. B) a decreasing shift in the demand for the product. C) an increasing shift in the supply of the product. D) a decreasing shift in the supply of the product.

an increasing shift in the supply of the product.

If the income elasticity of a particular good is negative 0.2, it would be considered A) a superior good. B) a normal good. C) an inferior good. D) an elastic good.

an inferior good.

Accounting costs A) are historical costs. B) are replacements costs. C) usually include implicit costs. D) usually include normal profits.

are historical costs

A tax that is imposed as a specific amount per unit of a good is a(n) A) excise or specific tax. B) sales or ad valorem tax. C) compound duty. D) income tax.

excise or specific tax.

Opportunistic behavior is best described as a firm A) gathering as much information as possible before dealing with another entity. B) attempting to make a profit from its dealings with another entity. C) firm trying to take advantage of another entity in its dealings with it. D) selecting another entity to deal with.

firm trying to take advantage of another entity in its dealings with it.

Which of the following is a common determinant of both supply and demand? A) income B) future expectations C) tastes and preferences D) sales tax

future expectations

Which of the following is the best example of how the question of "what goods and services to produce?" is answered by the command process? A) government subsidies for windmill energy production B) laws regarding equal opportunity in employment C) government allowance for the deduction of interest payments on private mortgages D) government regulations concerning the dumping of hazardous waste

government subsidies for windmill energy production

If the price elasticity of supply of a good is elastic and the good price increases, then the increase in the good's supply should be A) greater than the increase in price. B) less than the increase in price. C) the same as the increase in price. D) Cannot be determined from this information

greater than the increase in price.

The cross-price elasticity of demand for coffee and tea is likely to be A) greater than zero. B) less than zero. C) zero. D) infinity.

greater than zero.

The government unit that wants to achieve "revenue enhancement" will find it considerably more favorable to enact an excise tax on goods whose demand is A) highly elastic. B) relatively elastic. C) highly inelastic. D) unitary elastic.

highly inelastic.

Managerial economics is best defined as the economic study of A) how businesses can make the most profits. B) how businesses can decide on the best use of scarce resources. C) how businesses can operate at the lowest costs. D) how businesses can sell the most products.

how businesses can decide on the best use of scarce resources.

The best definition of economics is A) how choices are made under conditions of scarcity. B) how money is used. C) how goods and services are produced. D) how businesses maximize profits.

how choices are made under conditions of scarcity.

All of the following are non-price determinants of supply except A) costs. B) technology. C) income. D) future expectations.

income.

Holding supply constant, an increase in demand will A) increase both the quantity and price. B) increase the equilibrium price and decrease the equilibrium quantity. C) decrease the equilibrium price and increase the equilibrium quantity. D) decrease both the quantity and price.

increase both the quantity and price.

Other things remaining the same, an increase in the price of butter can be expected to A) increase margarine sales. B) decrease margarine sales. C) increase butter sales. D) None of the above

increase margarine sales.

Assuming mustard and burgers are complements, a decline in the price of burgers will A) decrease the demand for burgers. B) decrease in the quantity demanded of burgers. C) increase the demand for mustard. D) decrease the demand for mustard.

increase the demand for mustard.

Select the group that best represents the basic factors of production. A) land, labor, capital, entrepreneurship B) land, labor, money, management skills C) land, natural resources, labor, capital D) land, labor, capital, technology

land, labor, capital, entrepreneurship

If the demand for a product is said to be relatively inelastic, the "absolute" value of the elasticity coefficient will be A) less than one. B) greater than one. C) equal to one. D) zero.

less than one.

The cross-price elasticity of demand for coffee and coffee-cream is likely to be A) greater than zero. B) less than zero. C) zero. D) infinity.

less than zero

Another name for stockholder wealth maximization is A) profit maximization. B) maximization of earnings per share. C) maximization of the value of the common stock. D) maximization of cash flows.

maximization of the value of the common stock.

MVA (Market Value Added) A) will always be a positive number. B) may be a negative number. C) measures the market value of the firm. D) None of the above

may be a negative number.

Which of the following is not considered as a factor of production? A) money B) machinery and equipment C) land D) unskilled labor

money

Goals which are concerned with creating and maintaining employee and customer satisfaction and social responsibility are referred to as ________ objectives. A) social B) noneconomic C) welfare D) public relations

noneconomic

The rationing function of price A) occurs when there is a movement of resources into or out of markets as a result of changes in the equilibrium market price. B) is also known as the guiding function of price. C) occurs when consumers change their tastes and preferences. D) occurs only when the market experiences severe shortages.

occurs when consumers change their tastes and preferences.

If the consumption of sugar does not change at all following a price increase from 50 cents per pound to 65 cents per pound, the demand for sugar is considered to be A) relatively inelastic. B) perfectly elastic. C) perfectly inelastic. D) unitary elastic.

perfectly elastic

Which of the following is correct? The supply curve will shift when A) income, preferences, or the number of suppliers change. B) income, preferences, or the number of buyers change. C) income, preferences, or production technology changes. D) the number of sellers and the number of buyers change. E) production technology and input prices change.

production technology and input prices change.

If an item has several good substitutes, the demand curve for that item is likely to be A) relatively inelastic. B) relatively elastic. C) perfectly inelastic. D) unit elastic.

relatively elastic.

Suppose the price of beans rises from $1.00 a pound to $2.00 a pound, quantity demanded falls from 10 units to 6 units. In this example, the demand for beans is said to be A) relatively elastic. B) relatively inelastic. C) perfectly elastic. D) perfectly inelastic.

relatively inelastic

If OPEC increases its price of oil, and still the demand for oil decreases by a very small amount, we can conclude that the demand for oil is A) relatively elastic. B) relatively inelastic. C) perfectly elastic. D) perfectly inelastic.

relatively inelastic.

Unlike an accountant, an economist measures costs on a(n) ________ basis. A) explicit B) replacement C) historical D) conservative

replacement

The economic concept of "opportunity cost" is most closely associated with which of the following management considerations? A) market structure B) resource scarcity C) product demand D) technology

resource scarcity

Scarcity is a condition that exists when A) there is a fixed supply of resources relative to the demand for the product. B) there is a large demand for a product. C) resources are not able to meet the entire demand for a product. D) All of the above

resources are not able to meet the entire demand for a product.

The derived demand curve for a good component will be more inelastic A) the larger is the fraction of total cost going to this component. B) the more inelastic is the demand curve for the final good. C) the more elastic are the supply curves of cooperating factors. D) the less essential is the component in question.

the more inelastic is the demand curve for the final good.

An increase in input prices will cause A) supply to shift rightward, equilibrium price to rise, and equilibrium quantity to fall. B) supply to shift leftward, equilibrium price to rise, and equilibrium quantity to fall. C) supply to shift rightward, equilibrium price to fall, and equilibrium quantity to rise. D) supply to shift leftward, equilibrium price to fall , and equilibrium quantity to rise.

supply to shift leftward, equilibrium price to rise, and equilibrium quantity to fall.

All of the following are non-price determinants of demand except A) tastes and preferences. B) income. C) technology. D) future expectations.

technology.

If government imposes an excise tax on a good and the tax burden is borne equally by buyers and sellers, then A) price elasticity of demand is unitary. B) price elasticity of supply is unitary. C) the absolute values of price elasticities of demand and supply are equal. D) None of the above

the absolute values of price elasticities of demand and supply are equal.

Opportunity cost is best defined as A) the amount given up when choosing one activity over all other alternatives. B) the amount given up when choosing one activity over the next best alternative. C) the opportunity to earn a profit that is greater than the one currently being made. D) the amount that is given up when choosing an activity that is not as good as the next best alternative.

the amount given up when choosing one activity over the next best alternative.

A movement along a demand curve may be caused by a change in A) the non-price determinants of demand. B) the change in consumer expectations. C) the change in demand. D) the change in supply.

the change in supply.

Comparative statics analysis in economics is best illustrated as A) the comparison of equilibrium points before and after changes in the market have occurred. B) a comparison of two types of markets. C) the comparison of the percentage of change in the one variable divided by the percentage change in the other variable. D) an analytical technique used to show best case scenarios of demand and supply curves.

the comparison of equilibrium points before and after changes in the market have occurred.

Coke and Pepsi are substitutes if A) the demand for Coke increases when the price of Pepsi falls. B) the demand for Coke increases when the price of Pepsi rises. C) the supply of Coke increases when the price of Pepsi falls. D) the demand for Coke and Pepsi rise and fall together.

the demand for Coke increases when the price of Pepsi rises.

If a firm decreases the price of a good and total revenue decreases, then A) the demand for this good is price elastic. B) the demand for this good is price inelastic. C) the cross elasticity is negative. D) the income elasticity is less than 1.

the demand for this good is price inelastic.

The elasticity of demand for a product is likely to be greater A) the smaller the number of substitute products available. B) the smaller the proportion of one's income spent on the product. C) the larger the number of substitute products available. D) if the product is an imported good rather than a domestically produced good.

the larger the number of substitute products available.

Which of the following is the best example of "what goods and services should be produced?" A) the use of a capital intensive versus a labor intensive process of manufacturing textiles B) the production of SUVs versus the production of sub-compact cars C) the manufacturing of computer workstations in China or in India D) the leasing versus the purchasing of new capital equipment

the production of SUVs versus the production of sub-compact cars

Which of the following is the best example of opportunity cost? A) a company's expenditures on a training program for its employees B) the rate of return on a company's investment C) the amount of money that a company can earn by depositing excess funds in a money market fund D) the profit that a company forgoes when it decides to drop one product line in favor of another one

the profit that a company forgoes when it decides to drop one product line in favor of another one

A market is in equilibrium when A) supply is equal to demand. B) the price is adjusting upward. C) the quantity supplied is equal to the quantity demanded. D) tastes and preference remain constant.

the quantity supplied is equal to the quantity demanded.

The price elasticity of demand is a measure of A) the responsiveness of the quantity demanded to price changes. B) the quantity demanded at a given price. C) the shift in the demand curve when price changes. D) the demand for a product holding price constant.

the responsiveness of the quantity demanded to price changes.

Managerial economics is best defined as A) the study of economics by managers. B) the study of the aggregate economic activity. C) the study of how managers make decisions about the use of scarce resources. D) All of the above are good definitions.

the study of how managers make decisions about the use of scarce resources.

Which of the following is the best example of "how goods and services should be produced?" A) complying with the technical specifications in the production of an aircraft B) the production of jet aircraft for the air force or for a commercial airline C) the use of additional workers versus the use of machines in the production of goods D) the production of a new manufacturing facility

the use of additional workers versus the use of machines in the production of goods

A company will strive to minimize A) transaction costs. B) costs of internal operations. C) total costs of transactions and internal operations combined. D) variable costs.

total costs of transactions and internal operations combined.

How long is the "short-run" time period in the economic analysis of the market? A) three months or one business quarter B) total time in which sellers already in the market respond to changes in demand and equilibrium price C) total amount of time it takes new sellers to enter the market D) total amount of time it takes original sellers to leave the market

total time in which sellers already in the market respond to changes in demand and equilibrium price

If the price of a good is decreased and total revenue received from the sale of this good does not change, then the price elasticity of demand for the good is A) elastic. B) inelastic. C) unitary. D) None of the above

unitary.

When total revenue reaches its peak (elasticity equals 1), marginal revenue reaches A) 1. B) zero. C) -1. D) Cannot be determined from the information provided

zero

The cross-price elasticity of demand for coffee and caskets is likely to be A) less than zero. B) greater than zero. C) zero. D) infinity.

zero.