1) Assume that the price elasticity of demand is −.5 for a certain firm's product. If the firm decreases price, the firm's managers can expect total revenue to:
a) decrease.
b) increase.
c) remain constant.
d) increase or remain constant, depending upon the size of the price increase.
2) Which of the following statements is correct:
a) Maximizing total benefits is never equivalent to maximizing net benefits.
b) Maximizing total benefits is equivalent to maximizing net benefits if and only if there are no costs associated with achieving more benefits.
c) Profits cannot be maximized when marginal costs equal marginal benefits.
d) Net marginal benefits can never be equal to marginal benefits.