Which of the following is a determinant of the price elasticity of demand for an item?
A) the availability of a close substitute for the item
B) the percentage of a consumers budget allocated to expenditures on the item
C) the amount of time available to adjust to a change in the price of the item
D) All of the above are correct.
Answer: D
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The law of demand implies, holding everything else constant, that as the price of bagels increases
A) the demand for bagels will decrease. B) the demand for bagels will increase. C) the quantity of bagels demanded will increase. D) the quantity of bagels demanded will decrease.
If the firm produces one more unit of output and total cost rises from $1,000 to $1,050, marginal cost is
a. $1,050. b. $1,000. c. $2,050. d. $50.
Given high transactions costs, the best way to deal with a positive externality is
A. to allow both parties to negotiate. B. to limit the extent of the externality. C. to subsidize it. D. to tax it.
Select the graph below that best shows the change in the market specified in the following situation: In the market for Florida oranges, when a major frost damages the orange crop in California
Assume that the graphs show a competitive market for the product stated in the question.
A. Graph A
B. Graph B
C. Graph C
D. Graph D