A study of mass-transit systems in American cities revealed that in the long run revenues generally decline after substantial fare increases. This would suggest that:
A. The demand for mass transit is price-elastic in the long run
B. The demand for mass transit is price-inelastic in the long run
C. Mass-transit service deteriorates in the long run as price rises
D. There are few good substitutes for such systems in urban areas
A. The demand for mass transit is price-elastic in the long run
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The optimal combination of goods for a consumer to purchase is shown by
A. any intersection of the indifference curve and the budget line. B. the point where the budget line touches the vertical axis. C. a point of tangency between the budget line and the indifference curve. D. the point at which the indifference curve parallels the horizontal axis. E. the intersection of two indifference curves.
If a price ceiling of $8 were placed on the market in the graph shown, which area represents the surplus that is transferred from producers to consumers?
A. C + D + F + G
B. C + D
C. F + G
D. C
Explain why wage rates might rise at Joe's Quik-Print Shop if Joe replaces his aging copy machines with state-of-the-art copy machines