Suppose All of the Major Computer Manufacturers Announced That Beginning

question 141

Multiple Choice

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to

• A) increase.
• B) decrease.
• C) remain unchanged.
• D) increase if the demand for computers was relatively inelastic, but decrease if the demand for computers was relatively elastic.

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Definitions:

Purely Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and no barriers to entry or exit, leading to optimal prices for consumers.

Demand Curve

A visual depiction representing the correlation between an item's price and the desired quantity by buyers.

Break-even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Negative Economic Profits

A situation where a firm's total revenues are less than its total costs, including both explicit and implicit costs, indicating a loss.