When a 9% increase in price leads to a 6% increase in quantity supplied, supply is relatively inelastic
a. True
b. False
Indicate whether the statement is true or false
True
You might also like to view...
Suppose capital and labor are perfect complements in production. For output levels between 0 and 100, 2 units of labor together with 1 unit of capital produce 1 unit of output; for output levels between 100 and 200, 1 unit of labor together with 1 unit of capital produces 1 unit of output; and for output levels above 200, 1 unit of labor together with two units of capital produces one additional output. In each graph below, carefully label as much of each graph as you can. a. On a graph with labor on the horizontal axis and capital on the vertical, illustrate isoquants for 100, 200 and 300 units of output. b. Is this production technology homothetic?
c. Suppose the wage and rental rates are 10. On a graph with output on the horizontal axis and dollars on the vertical, plot the total (long run) cost of producing 100, 200 and 300 units of output and illustrate the total cost curve. d. On a separate graph with output on the horizontal and dollars on the vertical axis, illustrate the (long run) marginal cost curve and the approximate shape of the long run average cost curve. What will be an ideal response?
It is often argued that gas stations operate inefficiently because they have "excess capacity" in the form of more pumping stations than they would otherwise need if they were operating under conditions of perfect competition
However, can you think of any reason why a gas station franchise owner would wish to install more pumps than he knows will rarely if ever be fully utilized at any one time? Can you explain the economic logic of this "apparent" wastefulness?
Which of the following is false?
A. Tariffs on imports generate revenue for the government. B. Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff. C. Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff. D. An import quota does not generate government revenue.
Water is essential to life, while diamonds are not. However, water is cheap and diamonds are expensive. This paradox can be resolved by focusing on:
A) total utility rather than average utility. B) average utility rather than marginal utility. C) marginal utility rather than total utility. D) total utility rather than marginal utility. E) average utility rather than total utility.