Since it is always a negative number, economists use the convention of taking the absolute value of:
A. income elasticity of demand.
B. cross price elasticity of demand.
C. price elasticity of supply.
D. price elasticity of demand.
Answer: D
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In the long run, new firms enter a perfectly competitive market when
A) normal profit is greater than zero. B) economic profit is equal to zero. C) normal profit is equal to zero. D) economic profit is greater than zero. E) the existing firms are weak because they are incurring economic losses.
The paradox of value is illustrated by the fact that
A) a pound of bread is cheaper than a pound of gold. B) teens buy designer jeans. C) if diamonds were free they would no longer be useful for engagement rings. D) gold and diamonds occupy little space.
During the financial crisis of 2007-2009,
A) mortgage-backed securities became more liquid. B) information costs of mortgage-backed securities rose. C) information costs of mortgage-backed securities declined. D) the tax treatment of mortgage-backed securities was changed.
Demand is given by QD = 6000 - 50P. Domestic supply is QS = 25P. Foreign producers can supply any quantity at a price of $40
a. If foreign producers can sell in the domestic market, what is the equilibrium price? What is the equilibrium quantity? How much is sold by domestic and foreign producers, respectively? b. Under domestic government pressure, foreign producers voluntarily agree to restrict their goods. What will happen to the price and quantity? What will happen to the amount that domestic producers supply? What will happen to revenues of domestic and foreign producers?