A firm that attempts to pass along the cost of higher union wages to consumers in the form of higher prices will be more successful if the price elasticity of demand for its product is
A. Elastic.
B. Unitary.
C. Inelastic.
D. Perfectly elastic.
Answer: C
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All of the following are reasons for an oligopoly to occur EXCEPT
A) economies to scale. B) barriers to entry. C) independence among firms. D) merger.
Assume that the Paris First National Bank currently has deposits of $20 million. If the current required reserve ratio is raised from 20 percent to 40 percent, then:
a. Paris First National Bank does not have to comply with the Federal Reserve mandate. b. required reserves will decrease from $16 million to $12 million. c. excess reserves will automatically increase by $20 million. d. Paris First National Bank must close out 4 million in loans. e. Paris First National Bank must increase its required reserves from $4 million to $8 million.
If the government wished to shift aggregate demand to the right, it might:
A. increase government spending. B. increase income taxes. C. pressure the Fed to decrease the money supply. D. Any of these things might cause aggregate demand to shift to the right.
If a monopolistically competitive firm's demand curve is shifting left, it will stop shifting only when:
A. the firm raises its price. B. firms stop leaving the industry. C. the firm lowers its price. D. firms stop entering the industry.