Elasticity is
a. a measure of how much buyers and sellers respond to changes in market conditions.
b. the study of how the allocation of resources affects economic well-being.
c. the maximum amount that a buyer will pay for a good.
d. the value of everything a seller must give up to produce a good.
a
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Explain the statement "There is no such thing as a free lunch."
What will be an ideal response?
The study of exchange rate determination is a relatively new part of international economics, since
A) for much of the past century, exchange rates were fixed by government action. B) the calculations required for this were not possible before modern computers became available. C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time. D) dynamic overshooting asset pricing models are a recent theoretical development. E) the exchange rate never fluctuates.
Choices made by economic decision makers
a. are government decisions only b. are the primary focus of economics c. are not important in economic analysis d. occur infrequently e. do not involve ordinary citizens
If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?
a. immediately after the price increase b. one month after the price increase c. three months after the price increase d. one year after the price increase