If quantity demanded changes infinitely when the price changes, the demand:
A. is unit elastic.
B. is slightly elastic.
C. is inelastic.
D. is perfectly elastic.
Answer: D
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The Western railroads had been granted vast amounts of land by the government. Consequently, they
(a) Held on to it tightly. (b) Produced a competitive market with homesteading. (c) Wanted to profit only from providing railroad services. (d) Hindered economic development by restricting new farms in the West.
Refer to the above figure. If the economy is currently operating at point C, then there is
A) a stable long-run equilibrium situation. B) a recessionary gap. C) an inflationary gap. D) unemployment.
Answer the following statement(s) true (T) or false (F)
1. The extent to which a change in price affects quantity demanded may vary considerably from product to product and over the various price ranges for the same product. 2. A demand curve, or a portion of a demand curve, can be elastic, inelastic, or supply elastic. 3. A good is elastic if the percentage change in quantity demanded is greater than the percentage change in price. 4. A good is inelastic if quantity demanded changes proportionally less than the price changes 5. The steeper the demand curve passing through a given point, the more elastic the demand.
Which is of the following statements is correct?
A. If demand increases, then price will decrease B. If demand decreases, then price will decrease C. If price increases, then demand will decrease D. If price decreases, then demand will decrease