The larger the coefficient of price elasticity of demand for a product, the:
A. larger the resulting price change for an increase in supply.
B. more rapid the rate at which the marginal utility of that product diminishes.
C. less competitive will be the industry supplying that product.
D. smaller the resulting price change for an increase in supply.
Answer: D
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Which of the arguments Staples and Office Depot made in defense of their proposed merger would be least defensible on economic grounds?
A) There would be substantial economies of scale. B) The two firms were in competition with all other office supply stores, not just office supply superstores. C) The history of low pricing by the two stores meant that they would not raise prices in the future after they merged. D) Entry into the office supply market is relatively easy.
In terms of unemployment, hysteresis models try to explain why
a. cyclical unemployment is always present. b. structural unemployment cannot be eradicated. c. high unemployment persists even after its initial cause is long past. d. frictional unemployment is the cause of hysteresis.
In two-part pricing with identical consumers, a firm at least
A) charges a lump-sum fee equal to the producer surplus. B) sets unit price equal to marginal cost. C) cannot maximize profit compared to single-price monopoly pricing. D) Both A and B.
The longer the time period considered, the elasticity of supply tends to: a. decrease
b. remain constant. c. increase. d. converge to zero.