Suppose that in a month the price of a liter of soda increases from $1 to $1.50. At the same time, the quantity of liters of soda supplied increases from 200 to 210. The price elasticity of supply for liters of soda (calculated using the initial value formula) is:
A. 0.1.
B. 0.5.
C. 10.
D. 20.
Answer: A
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Long distance telephone service has become a competitive market. The average cost per call is $0.05 a minute, and it's declining. The likely reason for the declining price for long distance service is:
a. Governmental pressure to lower the price b. Reduced demand for long distance service c. Entry into this industry pushes prices down d. Lower price for a barrel of crude oil e. Increased cost of providing long distance service
Which of the following statements is true about comparative advantage?
a. Comparative advantage exists whenever one person, firm, or nation can do something at higher opportunity costs than some other individual, firm, or nation. b. Comparative advantage is interesting theoretically, but it is not relevant when evaluating real-world economic conditions. c. Low income countries cannot possibly have a comparative advantage in the production of any good or service because of the relatively low literacy rate. d. Comparative advantage exists whenever one person, firm, or nation can do something at lower opportunity costs than some other individual, firm, or nation. e. Only technologically advanced economies can have a comparative advantage in the production of a good or service.
Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?
The natural unemployment rate is higher if
A) many of the new jobs created require skills possessed by the available labor. B) there are fewer two-income households. C) unemployment benefits become more generous. D) efficiency wages are lower. E) there is a decrease in the working-age population.