Suppose that the value of the long-run absolute elasticity of demand for a good is one. Then, we know the short-run absolute price elasticity of demand will be
A) inelastic.
B) greater than one.
C) elastic.
D) less than one.
Answer: D
You might also like to view...
Over the past fifty years, there has been substantial closure of the gap in real GDP per person between which of the following groups of countries?
A) the United States and Central and South America B) Africa and Western Europe C) Central and South America and Africa D) the United States and Japan
If investment has a high sensitivity to the interest rate, the IS curve is rather __________, so that monetary policy has a __________ effect on GDP
A) flat; strong B) flat; weak C) steep; strong D) steep; weak
When someone is served pizza and soda for dinner, it is typical behavior to eat some pizza, then drink some soda, then eat more pizza, and so on, until the person stops consuming both. How can this behavior be explained using economic concepts?
A. The individual is revealing that he can't decide whether he gains more utility from pizza or from soda. B. People tend to act irrationally around food, and the concept of utility maximization cannot be applied. C. The person eats pizza until his marginal utility for pizza is lower than it is for soda, then he switches to soda. D. The concept of unlimited wants says he will never tire of eating pizza and soda.
Say a consumer is choosing between wine and cheese. The price of wine is 10 and the price of cheese is 5. If the marginal rate of substitution is 4, and if wine is on the horizontal axis and cheese is on the vertical axis then the consumer is purchasing
A. too much wine. B. purchasing more than what her income would allow. C. just the right amount of both goods. D. too much cheese.