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(Solved): Terri's Tacos finds that no matter how much it sells, its marginal revenue is always $3.50. This con ...



Terri's Tacos finds that no matter how much it sells, its marginal revenue is always $3.50. This constant marginal revenue tells us that the elasticity of its demand curve is:

   

infinity

   

3.5

   

1

   

0

 

It is reasonable to expect the cross price elasticity of demand for tennis rackets and tennis balls to be positive.

   

True

   

False

 

Demand and Supply
Price

 

Figure 3.1

According to Figure 3.1, if the government imposes a price ceiling of $2 per unit,

   

the market equilibrium quantity will decrease from 5 to 2 units.

   

the price ceiling is binding, as a result, the price will go up by $2 to $7.

   

the price ceiling is not binding, as a result, the price will stay at $5 per unit.

   

the price ceiling is not binding, as a result, the quantity will stay at 5 unit.

 

Demand and Supply
Price

Figure 3.1

According to Figure 3.1, if the government imposes a price floor of $2 per unit,

   

the market equilibrium quantity will decrease from 5 to 2 units.

   

the price floor is binding, as a result, the price will go down to $2. .

   

the price floor is not binding, as a result, the price will stay at $5 per unit.

   

it is against the constitution to impose a price floor below the market-clearing price.

Demand and Supply Price Demand and Supply Price


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