For which of the following is demand likely to be the most price elastic?
a. a good for which there are no close substitutes
b. a good for which there are no easily-obtained substitutes
c. a good with close substitutes that are difficult to obtain
d. a good that is no longer being produced
e. a good for which close substitutes are easily obtained
E
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The consumer price index (CPI) is a number that measures movements in the average (general) level of prices
a. True b. False Indicate whether the statement is true or false
If the interest rate at which you can lend funds is r percent per year, then the present value of Y dollars to be received next year is
a. (1 + r)Y b. Y / r c. Y d. Y - r e. Y / (1 + r)
Teddy's Bear Shop operates in a perfectly competitive market where the prevailing price is $15 . Teddy's marginal cost curve crosses his average total cost curve at $20 . The marginal cost curve crosses his average variable cost curve at $17 . In the short run, Teddy's Bear Shop
a. should operate at a lower output level where it can suffer less of an economic loss b. will suffer an economic loss, but should continue to operate at the minimum of its average variable costs c. will just break even, with neither a profit nor a loss, and should operate d. will suffer an economic loss and should shut down e. should operate at a higher output level where it can suffer less of an economic loss
Explain why a subsidy will not solve the problem of producing less than is socially optimal of a pure public good