Along a Demand Curve with Unitary Elasticity Everywhere,total Revenue

question 8

Multiple Choice

Along a demand curve with unitary elasticity everywhere,total revenue:

• A) increases as output increases.
• B) decreases as output increases.
• C) remains constant as output increases.
• D) increases and then decreases as output increases.
• E) decreases and then increases as output increases.

Analyze the impact of the free-rider problem on the provision of public goods.

Understand how the demand curve for public goods is determined and why it differs from private goods.

Appreciate the role of government and the challenges involved in funding and producing public goods.

Learn the marginal-cost-marginal-benefit rule and its application in determining the optimal provision of public goods.

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Definitions:

Normal Profit

The minimum amount of earnings that entrepreneurs must achieve to cover the cost of operating, essentially the breakeven point beyond which a business earns profit.

Implicit Costs

Indirect expenses related to business operations, such as opportunity costs, not directly paid out in cash.

Economic Profits

The excess of total revenue over total costs, including both implicit and explicit costs.

Implicit Costs

Costs that represent the opportunity cost of using resources that are not directly paid for, such as the owner’s time or the use of assets owned by the firm.