Which of the following goods is likely to have the lowest elasticity of demand?
A. Automobile
B. Furniture
C. Diamonds
D. Milk
Answer: D
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Firms that face capacity constraints can only increase output only up to the capacity, but no further. Therefore, firms
a. Should price to capacity as long as MR > MC b. Should price to capacity as long as MR = MC c. Should price to capacity as long as MR < MC d. Should not take capacity into consideration in pricing decisions
Benefits from specialization and trade exist even if the number of workers in trading nations is altered
a. True b. False Indicate whether the statement is true or false
When an economy is operating at its full employment rate of output:
A. the rate of unemployment will be zero. B. output will exceed the economy's maximum sustainable rate. C. the actual rate of unemployment will equal the natural rate. D. the economy's potential rate of output will exceed actual GDP.
An appreciation of the U.S. dollar relative to the Japanese yen causes
A. a lower dollar-price of Japanese goods which induces the U.S. to increase their purchasing of Japanese goods. B. the U.S. to buy less Japanese goods, causing the U.S. to depreciate. C. the quantity demanded of U.S. dollars to increase because the Japanese want to buy more U.S. goods. D. the Japanese to buy more U.S. goods, causing the dollars to appreciate further.