If a Firm Increases Its Prices When the Demand Is

question 127

Multiple Choice

If a firm increases its prices when the demand is inelastic, then the firm will see

• A)an increase in revenues.
• B)a decrease in revenues.
• C)no change in revenues.
• D)no effect on the sales of its product.

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Definitions:

Market-clearing Wage

The pay rate where the amount of labor offered matches the amount of labor required.

Electronic Devices

Gadgets and equipment that operate by controlling the flow of electrons or other electrically charged particles.

Efficiency Wage Model

A theory suggesting that higher wages lead to increased productivity by attracting higher quality workers and motivating all workers to avoid being fired.

Level of Employment

Refers to the number of people employed in the economy at any given time, influencing overall economic output.