If the price elasticity of supply is 1, supply is:
A. unaffected by price changes.
B. inelastic.
C. unit elastic.
D. elastic.
Answer: C
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Which of the following is a consequence of extending the payback period of a student loan from 10 to 30 years?
A) higher monthly payments B) more interest paid over the life of the loan C) faster payoff of principal D) lower monthly payments initially, but higher monthly payments in the future
Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) making a decision to advertise or not. Which of the following is the outcome of the dominant strategy without cooperation?
A) Both firm X and firm Y choose not to advertise. B) Both firm X and firm Y choose to advertise. C) Firm X chooses to advertise while firm Y chooses not to advertise. D) Firm X chooses not to advertise while firm Y chooses to advertise.
A perfectly competitive firm incurs a loss in the short run, if at the profit maximizing level of output:
a. the marginal revenue curve lies below the marginal cost curve. b. the marginal revenue curve lies above the average revenue curve. c. the average cost curve lies below the average revenue curve. d. the average revenue curve lies below the average cost curve. e. the marginal revenue curve lies above the marginal cost curve.
After the deregulation of the airline industry, the new airlines had a competitive cost advantage over the older ones as:
a. they could practice price discrimination. b. they did not bear any legacy cost. c. they enjoyed economies of scale. d. they had to pay lower fuel surcharge.