In which case will the price change be the greatest (assuming the shifts described are the same size)?
A. Supply is perfectly elastic, and demand shifts to the left.
B. Demand is elastic, and supply shifts to the left.
C. Supply is elastic, and demand shifts to the left.
D. Demand is inelastic, and supply shifts to the left.
Answer: D
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A company currently sells 10,00 . units at $9/unit and makes $20,00 . accounting profit. Variable costs currently stand at $6 per unit. By how much would variable costs have to increase before the company makes zero accounting profits?
a. $1.00 b. $2.00 c. $3.00 d. $4.00
Currencies depreciate and appreciate all the time. Who gains and who loses when the Mexican peso depreciates?
a. Americans holding Mexican pesos gain, U.S. tourists to Mexico lose b. U.S. exporters to Mexico gain, Americans holding pesos lose c. Mexican tourists gain, U.S. tourists in Mexico lose d. Mexican importers gain, Mexican exporters lose e. Mexican exporters gain, Mexican importers lose
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's risk level rises relative to England and nothing else changes, then
a. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc. b. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc. c. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate. d. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. e. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc.
If the own price elasticity of demand is infinite in absolute value, then:
A. the demand curve is horizontal. B. consumers do not respond at all to changes in price. C. demand is perfectly inelastic. D. demand is neither perfectly inelastic nor is the demand curve horizontal.