The Total Revenue Test Using the Price Elasticity of Demand

question 221

Multiple Choice

The total revenue test using the price elasticity of demand

• A) explains why monopolies will only operate on the elastic portion of their demand curve.
• B) explains why monopolies will only operate on the inelastic portion of their demand curves.
• C) demonstrates why a monopoly can earn an economic profit in the long run.
• D) determines whether a monopoly can perfectly price discriminate or not.
• E) cannot be used for a price discriminating monopoly.

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Definitions:

Infant Industry Argument

A protectionist stance arguing that emerging domestic industries should be shielded from foreign competition until they become competitive globally.

Dumping

The practice of selling goods in a foreign market at a price that is below the normal cost in the home market, often considered unfair competition.

Permanent Tariffs

Long-term taxes imposed on imported goods and services to protect domestic industries from foreign competition, raise government revenue, or both.

Eurozone

The group of European Union countries that have adopted the euro as their official currency.