Make liberal use of scrap paper to draw the graphs needed in answering many of the multiple choice questions. This is a closed book exam. Work on this exam must be entirely your own.
Total revenue is a. the profit of a firm.
All of the above answers are correct. When demand is elastic in the current price range, a. an increase in price would increase total revenue because the reduction in the quantity demanded is so great that it more than offsets the increase in price. If a price ceiling is a binding constraint, a. the actual price will be below the price ceiling. Suppose that there is a binding price ceiling imposed on the market for peaches. At the ceiling price, a. the quantity of peaches demanded will be greater than the quantity supplied.