It may be misleading to call water a necessity because
A) the amount of water a community consumes does not vary with the price people must pay for water.
B) the demand for water does not obey the law of demand.
C) the demand for water is highly elastic.
D) the demand for water is highly inelastic.
E) there are many uses of water for which good substitutes exist.
E
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When demand is price inelastic:
a. price and total revenue move in the same direction. b. price and total revenue move in the opposite direction. c. total revenue increases whether price goes up or down. d. total revenue decreases whether price goes up or down.
When regulating a natural monopoly, government officials face a dilemma that:
a. the efficient price may not allow the firm to break even. b. the efficient price may lead to an inefficiently high level of output. c. the efficient price leads to an output level that is too low. d. the efficient price may force the firm to shut-down. e. long-run average costs are constantly increasing.
Exhibit 5-8 GDP data (billions of dollars) Personal consumption expenditures$850 Interest90 Corporate profits150 Government spending400 Depreciation100 Rental income70 Gross private domestic investment120 Compensation of employees830 Exports120 Imports70 Indirect business taxes80 Proprietors' income120 Personal income taxes110 Social Security taxes50 Transfer payments160 In Exhibit 5-8, disposable personal income (PI) is:
A. $2,180 billion. B. $1,200 billion. C. $2,210 billion. D. $1,180 billion.
If pizza used to be produced in a perfectly competitive market, and now the pizza market has become a monopoly, we can expect:
A. less pizza to be sold at a higher price. B. more pizza to be sold at a higher price. C. less pizza to be sold at a lower price. D. more pizza to be sold at a lower price.