10) Suppose a product suddenly becomes very popular and the firms producing the
ID: 1092162 • Letter: 1
Question
10) Suppose a product suddenly becomes very popular and the firms producing the product begin to realize large profits.
In response, entrepreneurs would: 10) ______
A) exit the market and increase production.
B) enter the market and decrease production.
C) enter the market and increase production.
D) exit the market and decrease production.
16) Suppose the demand for energy drinks decreases by 20% due to recent repercussions found in the consumption. If the
supply elasticity is 1.2 and the demand elasticity is 0.80, the percentage change in the equilibrium price for energy drinks
will: 16) ______
A) fall by 10%. B) rise by 10%. C) fall by 0.1%. D) rise by 0.1%.
37) When the price of milk increases, total revenue increases for milk retailers. From this information, we can conclude that:
A) the supply of milk is inelastic. B) the demand for milk is inelastic.
C) the law of demand does not hold. D) corporations are greedy.
38) If the car manufacturer enjoys economies of scale, then an increase in the number of cars manufactured will lead to a(n):
A) constant average cost. B) decrease in total cost.
C) increase in average cost. D) decrease in average cost.
Explanation / Answer
10) C) enter the market and increase production.
16) A) fall by 10%
37) B) the demand for milk is inelastic.
38)D) decrease in average cost.
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