If the Demand for Cigarettes Is Inelastic

question 53

Multiple Choice

If the demand for cigarettes is inelastic,

• A)Total revenue will rise if the price of cigarettes rises.
• B)No matter how high the price goes,the quantity demanded will not fall.
• C)Total revenue will fall if the price of cigarettes rises.
• D)A price reduction will actually cause the quantity demanded to fall.

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Definitions:

Break-Even Point

The point at which total costs and total revenues are equal, meaning no net loss or gain is incurred by the business.

Market Price

The amount of money required to purchase something or the cost at which something can be bought or sold in a free market.

Economic Profit

The difference between total revenue and the sum of explicit and implicit costs.

Marginal Revenue

Marginal Revenue is the additional income received from selling one more unit of a good or service.