The cross price elasticities among substitute goods will be extremely high when
a. b and d
b. they are very similar to each other
c. people are consuming them frequently
d. people consume them in equal quantities
e. they are imperfect substitutes
B
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Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by
a. increases in production costs resulting from more firms coming into the market. b. a breakdown of the "free entry and exit" feature of competition. c. a breakdown of the "price taking" feature of competition. d. a stable demand curve for the good, that is, a demand curve that never shifts.
An increase in product price will cause:
A. quantity demanded to increase. B. the supply curve to shift to the left. C. quantity supplied to decrease. D. quantity demanded to decrease.
Suppose that once a well is dug, water flows out of it continuously without any additional effort. Customers collect their water and pay a per gallon fee when they leave the site of the well. In the short run, the competitive firm in this market
A) will not shut down because variable costs are zero. B) has no fixed costs. C) faces diminishing marginal returns. D) can act as a price setter.
A monopolistically competitive firm influences market price by virtue of its size.
Answer the following statement true (T) or false (F)