If quantity demanded rises significantly following a moderate price cut, then demand is:
A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Most likely elastic.
Answer: B. Inelastic.
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In the short run, the incidence of a sales tax is
a. wholly absorbed by the producer. b. shared between the consumer and the producer. c. deferred until the market is able to re-establish an equilibrium price. d. wholly absorbed by the consumer.
The shutdown point of a perfectly competitive firm occurs at the minimum point of its average total cost curve
a. True b. False Indicate whether the statement is true or false
The exchange rate changed from € 2.5/ $ to € 2.0/ $. Therefore:
a. The euro appreciated by 25% and the dollar depreciated by 20%. b. The euro depreciated by 25% and the dollar appreciated by 20%. c. The euro appreciated by 20% and the dollar depreciated by 25%. d. The euro depreciated by 20% and the dollar appreciated by 25%. e. The euro appreciated by 20% and the dollar depreciated by 20%.
External costs are modeled by creating a new social cost curve that is
A. higher than the original supply curve. B. lower than the original demand curve. C. higher than the original demand curve. D. lower than the original supply curve.