The most important determinant of the elasticity of supply is
A. the price of the good.
B. the time period firms have to adjust to the new price.
C. the proportion of the good in the budget of consumers.
D. whether the good is a durable good or a nondurable good.
Answer: B
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A change in demand means that
a. more will be bought at a lower price. b. a changed amount will be bought at the same given prices. c. less will be purchased at a higher price. d. the quantity demanded changes as the price changes.
If there are only two goods and these are consumed in fixed proportions, the price elasticities of demand for these two goods will sum to
a. 0.0 b. -0.5 c. -1.0 d. a number between 0 and -1.
The tools of monetary policy for altering the reserves of commercial banks are the:
a. Tax rate and level of government spending b. Public debt, budget surplus, and budget deficit c. Discount rate, reserve ratio, and open-market operations d. Consumer price index and unemployment rate
If a product has a short-run elasticity of supply equal to zero, then an increase in the demand for the product will:
A. Have no effect on price or quantity sold B. Increase price and leave quantity sold unchanged C. Increase price and reduce the quantity sold to zero D. Leave the price unchanged and reduce the quantity sold