Along a perfectly elastic demand curve,
a. the slope is always zero.
b. the price elasticity of demand is 1.
c. consumer purchases will not respond at all to a change in price.
d. All of the above are true.
a
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If buyers expect future price increase, they will ___________ their purchases while sellers will __________ production
a. Accelerate; accelerate b. Accelerate; delay c. Delay; accelerate d. Delay; delay
The Fed changes the reserve requirement sparingly because:
A. very small changes cause very large overall changes to money supply due to the money multiplier. B. it would cause uncertainty for banks and slow their rate of lending. C. sudden changes of such a huge magnitude would have far-reaching, and sometimes undesirable, effects. D. All of these are true.
Jimmy, Walter, Mike, and Bill run a school for political candidates. The school has fixed costs of $10 million, variable costs of $4 million, and total revenue of $15 million. In the short run the school will _____ and in the long run the school will ____.
A. operate; stay in business B. operate; go out of business C. shut down; stay in business D. shut down; go out of business
Suppose the interest rate on one-year U.S. T-bills is 4 percent and the interest rate on one-year British T-bills is 6.5 percent. If the dollar is at a one-year forward premium against the British pound of 3 percent, the covered interest differential is
A. equally favoring investments in both nations. B. in favor of investments in the United States. C. the same as the uncovered interest differential. D. in favor of investments in the United Kingdom.