As the number of substitutes for a good increases, its own-price elasticity becomes more
a. Unitary
b. Relatively elastic
c. relatively inelastic.
d. perfectly inelastic.
b
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In the "non-market-clearing model" the level of final goods sales and unemployment during a recession are
A) the result of interactions between supply and demand. B) higher than would be the case in a market clearing model. C) caused by the rapid adjustment of prices and wages. D) the result of wage and price rigidities.
Insurance companies do NOT cover losses that would
A) happen to all of the policyholders at once. B) happen with a very low probability. C) happen to just a handful of policyholders. D) happen with uncertainty.
The equilibrium interest rate will change if
a. the money demand curve shifts b. there is a movement along the money demand curve c. crowding out becomes so serious that the dollar loses value d. the federal funds rate fluctuates rapidly e. Congress threatens to put a cap on interest rates
Answer the following statement true (T) or false (F)
1) Elasticity of resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity." 2) An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources. 3) The marginal productivity theory of income distribution holds that all resources are paid according to their marginal contribution to society's output. 4) The marginal productivity theory of income distribution holds that all resources are paid according to their marginal contribution to society's output.