Author Question: If a firm can increase its sales only by lowering its price, then A) the firm is a price ... (Read 91 times)

jayhills49 · **on:** Jun 29, 2018

If a firm can increase its sales only by lowering its price, then

A) the firm is a price searcher.
B) the firm's marginal revenue will be less than price.
C) the demand curve for the firm's product is negatively sloped.
D) all of the above are true.

Question 2

Define a Pareto efficient outcome. Does it ensure equity? Explain with an example.

What will be an ideal response?

kilada · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

D

Answer to Question 2

An outcome is said to be a Pareto efficient outcome if it is not possible to make someone better off without making someone else worse off. Pareto efficiency does not ensure equity. For example, 100 is divided between two individuals such that one individual receives 75 and the other individual receives 25. This allocation is Pareto efficient as it is not possible to make an individual better off without making the other worse off, but the allocation does not represent equity.