A weakness of the classical model is
a. the quality of its explanations for long-run movements of the economy
b. its confusion between the long and short run
c. its assumption that the labor market always clears
d. its treatment of crowding out in the long run
e. its inadequate attention to the long run
C
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If the absolute value of the price elasticity of demand for a product is greater than 1, then
A) quantity demanded is not very sensitive to price changes. B) demand is elastic. C) demand is unit-elastic. D) demand is inelastic.
Figure 11-5
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Figure 11-5 contains a production possibilities frontier for wheat and milk production. Explain why Point C is not a point where resources are being used efficiently.
What will be an ideal response?
We assume that in the long run in a perfectly competitive market:
A. the firms can enter or exit. B. collusion will set in without government regulation. C. the price will be constant. D. the number of firms is fixed.
The imposition of a binding price floor on a market
a. causes quantity demanded to be greater than quantity supplied. b. causes quantity demanded to be less than quantity supplied. c. causes quantity demanded to be equal to quantity supplied. d. causes a decrease in demand.