Provide examples of goods or services whose elasticities of supply are (a) zero, (b) greater than zero but less than infinity, and (c) infinity
What will be an ideal response?
Here are some examples:
a) The momentary supply of wheat is perfectly inelastic. Once farmers have brought their wheat to market, there is no other alternative use for it and they sell it all regardless of the going price.
b) The short-run supply of wheat. If the farmers already have a mature wheat crop but have not yet harvested it, farmers with both relatively high and low yield fields may chose to harvest both types of fields if the price for wheat is high. However, the farmers will not harvest their low yield fields when the price of wheat is relatively low to economize on added labor costs.
c) The supply of wheat to an individual buyer. Any one buyer can purchase as much wheat at the going price as he or she desires. However, no quantity of wheat will be supplied at a lower price.
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Refer to the figure above. What is the equilibrium price after the demand curve shifts to D2?
A) $20 B) $40 C) $60 D) $80
If GDP decreases, there will initially be
A) a surplus of money and the equilibrium interest rate will rise. B) a surplus of money and the equilibrium interest rate will fall. C) a shortage of money and the equilibrium interest rate will rise. D) a shortage of money and the equilibrium interest rate will fall.
The transactions approach to measuring money relies on the role of money primarily as a
A) temporary store of value. B) standard of deferred payment. C) unit of account. D) medium of exchange.
Unemployment taxes are collected from both employees and employers.
A. True B. False C. Uncertain