If a revenue-maximizing firm is told that the price elasticity of ...

[khang]

If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
 a. raise prices 1 percent.
  b. lower prices 1 percent.
  c. raise prices until the elasticity becomes very high.
  d. keep the price where it is.
  e. lower prices until the elasticity becomes very high.

Question 2

If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself, he can expect:
 a. no change in his total revenues.
  b. everyone to begin buying his product.
  c. a complete loss of revenues.
  d. a new demand curve.
  e. a relative increase in income.

[kristenb95]

Answer to Question 1

d

Answer to Question 2

c

[khang]

TYSM

[covalentbond]

Excellent