If the quantity effect outweighs the price effect of a price increase, then demand is:
A. elastic.
B. inelastic.
C. normal.
D. unit elastic.
Answer: A
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If producers incorrectly set the price of their product too high:
A. a shortage will result. B. a surplus will result. C. equilibrium will result. D. the industry will die out soon.
A lump-sum tax:
A. takes the same percentage of taxes from income from all taxpayers. B. requires those with low incomes to pay a smaller percentage of their income than high-income people. C. is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers. D. taxes everyone the same amount, regardless of their income.
The allocative function of price cannot operate unless there is:
A. either free entry or free exit. B. neither free entry no free exit. C. both free entry and free exit. D. a significant barrier to entry.
Studies have shown that differences in wages between men and women:
A. are explained in part by differences in productivity and in part by discrimination. B. are fully explained by differences in productivity, education, and skill. C. have disappeared in the last five years. D. are fully explained by discrimination.