Remember that the price elasticity of supply is calculated by taking the percent change of the quantity supplied (in this case 0%) divided by the percent change in the price (in this case 5%). So the price elasticity of supply of Good Y is 0.

我f we are in the inelastic portion of the demand curve, an increase in price will increase TR, since the price effect is greater than the quantity effect. Quantity will still decrease.

Total revenue is price multiplied by quantity (TR = P x Q). At point A, price is $10 and quantity is 2, so TR = 2 x 10 = 20.

我f a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.

To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.

The change in price of a substitute good shifts demand.

An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.

The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.

For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.

Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.

All of the other answer choices would cause the demand curve to decrease.

The definition of the long run is a period of time in which fixed costs are able to change. For example, in the long run, a firm can move to a new plant that costs less money to operate each month.

Sunk costs are costs that cannot be recovered and therefore would not change, even in the long run.

The price elasticity of supply refers to the responsiveness of the supply curve to a change in price.

The profit maximizing rule for the firm is marginal revenue equals marginal cost. Notice that the rule does not explicitly involve average total or average variable costs.

The MR=MC profit maximizing rule holds for all market structures - monopoly, oligopoly, monopolistic competition, and perfect competition.

我f marginal revenue is less than marginal cost, then the firm actually loses profits with continued production.

The definition of a dominant strategy is one that leads to the highest payoff for a particular player, regardless of what other players do.

Nash equilibrium can be achieved as the result of playing a dominant strategy, eliminating answer choice "never results in Nash equilibrium".