Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a price ceiling that is 10 percent below the market clearing price?
A) A shortage equal to 1.8 percent of the market clearing quantity
B) A shortage equal to 0.6 percent of the market clearing quantity
C) A shortage equal to 18 percent of the market clearing quantity
D) A shortage equal to 6 percent of the market clearing quantity
E) More information is needed.
C
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The consumer price index (CPI) tends to understate the true rate of inflation
a. True b. False Indicate whether the statement is true or false
Which of the following is true of the price elasticity of demand of a product?
a. It measures the responsiveness of quantity demanded or quantity supplied to a change in one of the determinants of demand and/or supply. b. It is calculated as the percentage change in the quantity demanded of the product divided by the percentage change in the price of the product. c. It is calculated as the percentage change in the demand for the product divided by the percentage change in income of a consumer, everything else held constant. d. It measures the responsiveness of demand to a change in the quantity supplied. e. It is calculated as the percentage change in the quantity demanded of the product divided by the percentage change in the price of a related product, everything else held constant.
Which of the following represents a double coincidence of wants?
A) Smith has what Jones has and neither wants what the other has. B) Smith has what Jones wants but Jones doesn't have what Smith wants. C) Smith has what Jones wants and Jones has what Smith wants. D) Smith wants what Jones has, Jones wants what Brown has, and Brown wants what Smith has. E) none of the above
In a market system, the distribution of goods and services among consumers is largely determined by:
A. The willingness and ability of consumers to pay the prices B. Whoever needs the goods and services the most C. Whoever has the closest connection to firms and the government D. A random factor that is almost impossible to predict