In Figure 3.1, which figure shows a situation that is perfectly elastic?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
Answer: A
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Due to the lack of timely data for the price level and economic growth, the Fed's strategy
A) targets the exchange rate, since the Fed can control this variable. B) targets the price of gold, since it is closely related to economic activity. C) uses an intermediate target, such as an interest rate. D) stabilizes the consumer price index, since the Fed can control the CPI.
If the cost of labor decreases the isocost line will
A) stay the same. B) shift outward in parallel fashion. C) rotate outward around the point where only capital is employed in production. D) shift inward in parallel fashion.
Transfer payments include:
a. government spending on tanks and planes. b. government spending on national forests and parks. c. the salaries of senators and federal judges. d. welfare benefits and Social Security payments.
If the demand for beans tends to decline as incomes rise, everything else held constant, beans are _____
a. luxury goods b. normal goods c. price sensitive d. not price sensitive e. inferior goods