Problem
The demand for saffron is highly elastic. The demand for cigarettes is highly inelastic. The demand for peanut butter is unit-elastic.
a. If saffron producers reduce the price of saffron, what will happen to total revenue as a result? Will marginal revenue be positive, zero, or negative?
b. If cigarette makers reduce the price of cigarettes, what will happen to total revenue as a result? Will marginal revenue be positive, zero, or negative?
c. If peanut butter producers reduce the price of peanut butter, what will happen to total revenue as a result? Will marginal revenue be positive, zero, or negative?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.