Refer to Figure 24.3. Which of the following statements is true about the price elasticity of demand at price P3?
A. The price elasticity is zero.
B. The price elasticity is inelastic.
C. The price elasticity is unitary.
D. The price elasticity is elastic.
Answer: D
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Refer to Figure 2-12. One segment of the circular flow diagram in the Figure shows the flow of funds from market F to economic agents G. The funds represent spending on goods and services. What is market F and who are economic agents G?
A) F = product markets; G = firms B) F = factor markets; G = firms C) F = factor markets; G = households D) F = product markets; G = households
A country that must inhibit imports should give preference to
a. quotas over tariffs because quotas are less likely to distort trade patterns between nations. b. tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. c. export subsidies over quotas or tariffs because export subsidies can protect a nation's domestic producers. d. an embargo wherever possible because an embargo can serve as a political weapon in addition to being a "trade stopper."
Refer to the following graph.
If the price is set at Pc:
A. a nonprice rationing mechanism must determine which producers will be able to sell the product. B. a nonprice rationing mechanism must determine which buyers will be able to purchase the product. C. the demand curve will shift to the left to achieve a new equilibrium. D. anyone willing and able to pay the asking price will be able to purchase the product.
An effluent fee is an example of
A. a government policy to promote the production of a product with an external benefit. B. a government policy to correct for an external cost. C. a government policy to promote the production of a product with an external cost. D. a government policy to correct for an external benefit.