Under a market system, the people with information about buyers' desires, production technology and resources make the decisions
Indicate whether the statement is true or false
TRUE
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If the demand for used cars decreases after the price of a new car falls, used cars and new cars are
A) substitute goods. B) inferior goods. C) normal goods. D) complementary goods. E) The questions errs because it is the quantity of used cars, NOT the demand for used cars, that will change when the price of a new car falls.
If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be
A) one. B) less than one. C) greater than one. D) indeterminate without more information.
Economists usually believe that:
A. competition encourages innovation. B. innovation encourages competition. C. innovation leads to market power and should be regulated. D. market power leads to innovation.
Which of the following statements is correct with respect to price elasticity of supply?
A. The price elasticity of supply tends to be greater as new firms can easily enter the market. B. The price elasticity of supply tends to be greater as expanding existing production facilities is less costly. C. The price elasticity of supply tends to be smaller as firms have limited production facilities. D. All of these are correct.