Which of the following is NOT a determinant of the price elasticity of demand?
A) the availability of potential substitutes
B) the share of the budget spent on the item
C) the time the consumer has to adjust to the price change
D) the cost to produce the product
D
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Suppose two countries use different combinations of inputs, such as labor and capital, to produce the same product. This implies all of the following except that
A) one country is more efficient in the production of the good than the other. B) the inputs are not equally productive in the two countries. C) the prices of the inputs are not the same in the countries. D) the two countries use different technologies to produce the product.
John believes that when the price of a good increases people will purchase more of the good. This statement is
A) consistent with the law of demand. B) inconsistent with the law of demand. C) referring to money prices. D) consistent with the law of supply.
In general, horizontal mergers will
A) increase the number of firms in an industry. B) decrease the number of firms in an industry. C) increase competition in an industry. D) reduce economic profits in an industry.
Let supply be given by Q = -7.5 + 0.5P and demand by Q = 10 - 0.2P. Suppose we now place a tax of $7 per unit of output on the seller. The new equilibrium price will be:
A. 10 B. 30 C. 37 D. 4