The demand for a new effective drug for the cure of AIDS would most likely be
a. elastic.
b. unit elastic.
c. perfectly elastic.
d. highly inelastic.
d
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In a closed economy, net exports are _________
Fill in the blank(s) with the appropriate word(s).
When the production or consumption of a good involves an externality: a. resources are necessarily overallocated to the good
b. resources are necessarily underallocated to the good. c. someone not involved in buying or selling the good is affected. d. the market will efficiently allocate resources to its production.
According to new classical economists, policies should be introduced suddenly to surprise the economy in order to
A. Prevent political lobbying that results in goal conflicts. B. Minimize design problems that impede the implementation of policy. C. Avoid the lags associated with policy announcements. D. Prevent anticipatory behavior that defeats the purpose of the policy.
Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises, increasing the marginal and average total costs of producing candy canes by $0.05. Based on the information given, we can conclude that in the short run a typical producer of candy canes will be making:
A. zero economic profit. B. The answer is impossible to determine based on the information given. C. an economic profit. D. negative economic profits.