In the long run, the price elasticity of demand is ________ than in the short run because ________
A) less; consumers have more time in which to make adjustments to price changes
B) less; the percentage change is measured over a larger amount of time
C) greater; consumers have more time in which to make adjustments to price changes
D) greater; firms have more time to shift the burden of the tax forward to consumers
C
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Steve has two goods he can spend his income on, skiing and skating, and his marginal utilities from each are in the table above. The price of each unit of skiing is $10 and the price of each unit of skating is $5. Steve has $40 to spend
What quantities of skiing and skating should Steve consume to maximize his utility? A) 4 units of skiing and 4 units of skating B) 2 units of skiing and 4 units of skating C) 1 unit of skiing and 2 units of skating D) 5 units of skiing and 5 units of skating
If the external costs of production are not taken into account, then production will
A) be less than socially desirable. B) be more than socially desirable. C) be the same since only prices are affected by externalities. D) cease.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
The rising part of a perfectly competitive firm's marginal cost curve that is equal to or above points on its average variable cost curve is the firm's
A. short run supply curve. B. economic profit curve. C. normal profit curve. D. long run supply curve.