A perfectly inelastic demand implies that buyers
a. decrease their purchases when the price rises.
b. purchase the same amount as before when the price rises or falls.
c. increase their purchases only slightly when the price falls.
d. respond substantially to an increase in price.
b
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Globalization is defined as the process of countries becoming ________ open to foreign trade and ________ open to foreign investment
A) more; more B) more; less C) less; less D) less; more
A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income
To compute an appropriate value for c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to: A) c(I/Q) B) c(Q/I) C) -b(I/Q) D) Q/(cI)
Given a Cobb-Douglas production function estimate of Q = 1.19L.72K.18 for a given industry, this industry would have:
a. increasing returns to scale b. constant returns to scale c. decreasing returns to scale d. negative returns to scale e. none of the above
If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:
A. accounting profits must be positive, but economic profits are zero. B. economic profits must be positive. C. other firms will exit the market. D. firms will exit the market.