Elasticity is a measure of the responsiveness of change in quantity demanded to a change in price.
Answer the following statement true (T) or false (F)
True
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The consumption function shows the relationship between planned real consumption spending and
A) planned real saving. B) the average propensity to consume. C) real disposable income. D) the marginal propensity to consume.
Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If the last worker hired produces four units of output per hour, then to maximize profits the firm should
A) hire another worker. B) not change the number of workers it currently hires. C) lay off some workers. D) There is not enough information to answer the question.
An unexpected rise in the Purchasing Managers' Index should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
Answer the following questions true (T) or false (F)
1. A product's price approaches its marginal cost as market concentration increases. 2. A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product. 3. Holding everything else constant, government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.