How does elasticity of supply differ for a product that can be stored, compared to a product that cannot be stored?
What will be an ideal response?
A product that can be stored can be withheld from the market for a time when the price falls and can be quickly supplied to the market from the inventory when the price rises. Hence the quantity supplied of the product can be quickly and markedly changed and so the supply is elastic. A product that cannot be stored, especially if it is perishable, cannot be withheld from the market when the price falls because it will spoil. In addition, when the price rises it cannot be supplied from the inventory because there is no inventory. Hence the quantity supplied of the product that cannot be stored cannot change much and is therefore less elastic.
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Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of
a. lemons and sugar. b. paper cups. c. the wages paid to her hourly workers. d. All of the above are correct.
If the marginal rate of substitution between future and current consumption is less than one, then this consumer exhibits
A. a positive time preference. B. a negative time preference. C. an increasing preference. D. a neutral time preference.
The age-earning cycle shows an individual typically earning
A. an income that declines until age 30-35 and then increases rapidly. B. an income that cycles upward and downward as an individual ages. C. an income that increases with age, peaks, and then falls as retirement approaches. D. a constant income (adjusted for inflation) over the entire working life of the worker.
Which of the following sequence of events follows an open market sale by the Fed?
A. r? ? I? ? AE? ? Y? B. r? ? I? ? AE? ? Y? C. r? ? I? ? AE? ? Y? D. r? ? I? ? AE? ? Y?