Which of the following is the most important determinant of the elasticity of supply?
a. The number of uses for the product
b. The number of close substitutes to the product available to consumers.
c. The amount of time producers have to adjust their behavior in response to a price change.
d. The percentage of their incomes consumers spend on the product.
c
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Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:
A. excess supply will lead the price to fall. B. excess demand will lead the price to fall. C. excess supply will lead the price to rise. D. excess demand will lead the price to rise.
Refer to the table and information below. What is the total cost and total benefit of doing projects A, B, and C?
Assume that a government is considering a new social program and may choose to include in this program any number of four progressively larger projects. The marginal cost and the marginal benefits of each of the four projects are given in the table.
A. Total cost is $5 billion and total benefit is $7 billion
B. Total cost is $4 billion and total benefit is $7 billion
C. Total cost is $9 billion and total benefit is $12 billion
D. Total cost is $16 billion and total benefit is $20 billion
An inferior good exhibits
A) a negative income elasticity. B) a downward sloping Engel curve. C) a decline in the quantity demanded as income rises. D) All of the above.
The requirement that all drivers must carry auto insurance reduces
A) moral hazard. B) the effectiveness of signaling. C) adverse selection. D) the chance of auto accidents.