Which of the following could cause a long-run shift in demand as part of the "guiding function of price"?
A) a change in tastes and preferences
B) an increase in price caused by a shift in supply
C) income shift caused by an economic recession
D) an increase in number of buyers
B
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If the price elasticity is between 0 and 1, demand is
A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic.
If a firm that repairs both motorcycles and cars is able to do so at a lower cost than a firm that does only one or the other, this would be an example of
A) economies of scope. B) economies of scale. C) monitoring. D) increasing transactions costs.
In the short run, an increase in investment, ceteris paribus, shifts the
A) AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. B) AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. C) SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. D) SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease.
Governments like to know the price elasticity of demand because it helps them determine how changes in sales tax rates will affect:
A. tax revenues. B. government spending. C. income. D. profits.