Business people often speak about price elasticity without actually using the term. Which statement describes a good with an elastic demand?
A) "A price cut won't help me. It won't increase my sales, and I'll just get less money for each unit."
B) "I don't think a price cut will help my bottom line any. Sure, I'll sell a bit more, but I'll more than lose because the price will be lower."
C) "My customers are real shoppers. After I cut my prices just a few cents below those my competitors charge, customers have been flocking to my store and sales are booming."
D) "The economic expansion has done wonders for my sales. With more people back at work, my sales are taking off!"
C
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Demand tends to be ________ in the short run than in the long run.
A. less elastic B. more variable C. less important D. more elastic
Jane started eating more junk food and taking less care of her health after she bought life insurance. Her behavior is an example of ________
A) moral hazard B) adverse selection C) the paradox of thrift D) the free-rider problem
The firm should hire more labor as long as doing so adds more to ________ than it does to ________
a. costs; revenues b. revenues; resources c. costs; resources d. revenues; costs
If the price of a product decreases, we would expect
What will be an ideal response?