If a supply curve is a horizontal line, supply is said to be
A) unit elastic. B) inelastic. C) perfectly elastic. D) perfectly inelastic.
C
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An increase in the demand for green tea raises the price of green tea from $16 a pound to $20 a pound. As a result, quantity supplied increases by 30 percent. Using the midpoint formula, what is the value of the price elasticity of supply?
A) 1.35 B) 1.875 C) 2.22 D) 7.5
Competitive markets tend to produce an inefficiently large amount of beneficial externalities.
Answer the following statement true (T) or false (F)
This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.If Starbucks and Dunkin Donuts are faced with the game in the figure shown, we can see that:
A. Starbucks has a dominant strategy, but Dunkin Donuts does not. B. Dunkin Donuts has a dominant strategy, but Starbucks does not. C. both companies have a dominant strategy. D. neither company has a dominant strategy.
Which of the following statements is true?
A. Keynesians believe that consumers are inherently unstable in consumption decisions, but that businesses are relatively stable in making investment decisions. B. Monetarists believe in discretionary monetary policy. C. Lowering tax rates is the main priority of supply side economists. D. Supply-side economists believe in a heavily regulated economy.