All of the Following Are True Regarding the Relationship Between

question 398

Multiple Choice

All of the following are true regarding the relationship between price elasticity of demand and total revenues EXCEPT

• A) when market demand is elastic, if the market price declines, then total revenues will rise.
• B) when market demand is unit elastic, if the market price rises, then total revenues will not change.
• C) when market demand is inelastic, if the market price falls, then total revenues will decrease.
• D) when market demand is inelastic, if the market price rises, then total revenues will decrease.

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Definitions:

Marginal Cost

The hike in overall financial outlay due to producing an extra unit of a product or service.

Total Industry Profit

The cumulative profit earned by all companies operating within a specific industry.

Cartel

An association of manufacturers or suppliers that maintains prices at a high level and restricts competition by controlling the production and distribution of a product or service.

Marginal Cost

The additional cost incurred in producing one more unit of a good or service.