Refer to the accompanying figure. Let ?X denote the price elasticity of demand at point X. Which of the following describes the relationship between ?A, ?B and ?C?
A. ?A> ?B> ?C
B. ?B> ?C> ?A
C. ?A> ?C> ?B
D. ?C> ?B> ?A
Answer: C
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The expansion of capital that can occur in the long-run but not, by definition, in the short-run, means that the long-run supply is
a. perfectly horizontal while the short-run supply curve is upward sloping. b. sloping downwards while the short-run supply curve is upward sloping. c. less elastic than the short-run supply curve. d. more elastic than the short-run supply curve.
Which of the following best explains why a firm in a competitive price-taker market must take the price determined in the market?
a. The short-run average total costs of firms that are price takers will be constant. b. If a price taker increased its price, consumers would buy from other suppliers. c. Firms in a price-taker market will have to advertise in order to increase sales. d. There are no good substitutes for the product supplied by a firm that is a price taker.
Which of the following did John Maynard Keynes believe held the key to understanding fluctuations in investment?
a. how people spend their money b. how businesses make predictions c. how inflation affects the economy d. how governments enact policy
Restricting imports
A) can protect United States jobs in the protected industry, which increases economic welfare of the country as a whole. B) can protect United States final goods and services in the protected industry and makes consumers better off. C) can protect United States final goods and services in the protected industry and increase economic welfare of the country as a whole. D) can protect United States jobs in the protected industry but will also lead to reductions in U.S. output and income.