Author Question: If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should: ... (Read 27 times)

khang · **on:** Jun 30, 2018

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.