The price elasticity of supply is always a positive value because
i. there is a direct relationship between the price and the quantity supplied.
ii. as the equilibrium price increases, the equilibrium quantity also always increases.
iii. buyers are willing to pay a higher price for larger quantities.
A) i only
B) ii only
C) iii only
D) i and ii
E) ii and iii
A
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What are some reasons that an "emerging market" country may choose a fixed exchange rate regime?
What will be an ideal response?
Dorothy lives in a city with high air pollution. Pollution is a bad, but she is able to avoid air pollution by wearing a face mask. Her preferences are given by
U(q1,q2 ) = (q1 - P)2q22 where q1 is the amount of time she spends wearing a mask, P is the amount of pollution and q2 is a composite of other goods (p2 = 1 ). Dorothy must decide how much to wear a mask and how much q2 to purchase. The price of masks is pM. Assume q1* > P when answering this question. a. Derive Dorothy's demand for masks, q1*(p1,Y, P) b. How does the quantity of pollution affect the demand for masks? That is, find q1*/P. c. How does her income influence the quantity of masks she purchases? That is, find q1*/Y. d. What condition must hold for the assumption q1* > P to hold?
The more elastic the demand for a good,
a. the more of an excise tax is that is collected by sellers b. the more of an excise tax that is paid by buyers c. the more an excise that is paid by sellers d. the more elastic the supply of that good e. the smaller the burden of a tax on that good
Aggregate supply is
A. the stock of all goods in the economy. B. the sum of all planned production in the economy. C. the summation of all product supply curves. D. the horizontal summation of all supply curves for services.