The price elasticity of demand is generally
What will be an ideal response?
negative, but the minus sign is ignored.
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As a person consumes more of a good, the
A) marginal benefit increases. B) marginal benefit decreases. C) marginal benefit increases or decreases depending whether or not the economy is on the PPF. D) price of the good falls.
The cross elasticity of demand for pizza with respect to the price of a soda is
A) positive because the goods are complements. B) negative because the goods are complements. C) positive because the goods are substitutes. D) negative because the goods are substitutes.
A monopolist’s profit per unit is shown by the difference between price and average cost per unit.
Answer the following statement true (T) or false (F)
The firms in a market have decided not to compete with one another and have agreed to limit output and raise price
A) This practice is known as concentrating and is legal in the United States and Canada. B) This practice is known as collusion and is illegal in the United States. C) In this way firms take advantage of economies of scale. D) This is an effective barrier to entry, but is illegal in the United States.