1If a firms sales revenue falls after lowering the price of

1.If a firm’s sales revenue falls after lowering the price of its product, the demand for its product is?

A. Price elastic

B. Price Inelastic

C. Unitary price elastic

D. Represented by an upward sloping demand curve

2. If there were an increase in the cost of producing a good sold in a market, then you would expect?

A. The markets equilibrium price to increase and equilibrium quantity to increase.

B. The markets equilibrium price to decrease and equilibrium quantity to increase.

C. The markets equilibrium price to increase and equilibrium quantity to decrease.

D. It is impossible to determine without additional information

3. If the price of a good or service decreases and all nonprice factors are held constant, then?

A. The quantity supplied will decrease

B. The quantity supplied will unchanged

C. The supply curve will shift to the right

D. The supply curve will shift to the left

Solution

1. If a firm’s sales revenue falls after lowering the price of its product, the demand for its product is?

Answer –

B. Price Inelastic

When the price falls and along with that the revenue also falls, it means the demand is inelastic.

2. If there were an increase in the cost of producing a good sold in a market, then you would expect?

Answer –

C. The markets equilibrium price to increase and equilibrium quantity to decrease.

When there is an increase in the cost of production of goods sold in the market, the supply decreases (curve shifts to the left hand side). Because of this the equilibrium price increases and the quantity decreases.

3. If the price of a good or service decreases and all nonprice factors are held constant, then?

Answer –

A. The quantity supplied will decrease

The Law of Supply states that, keeping other factors (non price) constant, an increase in price results in an increase in quantity supplied.