-Figure 10-1 Shows the Demand Schedule Facing the Only Gas

question 114

Multiple Choice

-Figure 10-1 shows the demand schedule facing the only gas station in a small Midwestern town.The station does not price discriminate.Which of the following statements is correct?

• A)The demand curve facing Friendly Stop has a constant price elasticity.
• B)If the station increases sales from 100 to 110 gallons,marginal revenue will equal $1.40.
• C)If the station increases sales from 100 to 110 gallons,marginal revenue will equal $14.00.
• D)Demand is price elastic throughout the demand schedule.
• E)The owner of the station would be unwilling to charge either $1.00 or $0.90 per gallon.

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Definitions:

Price

The total money needed for acquiring a good, service, or asset.

Short Run

A period during which at least one of a firm's inputs is fixed, limiting its capacity to adjust to changes in demand.

TC

Total Costs, the sum of all costs incurred in the production of goods or services.

TR

Total Revenue; the total receipts from sales of goods or services provided by a company before any deductions are made.