Using the concept of elasticity, show that a drug enforcement policy aimed at getting rid of heroin suppliers may not be very effective in reducing heroin consumption
A policy that targets suppliers will shift the supply curve to the left, which will raise price. Because the
demand for heroin is likely to be very inelastic, the price will rise; the market quantity will only fall
slightly; and total revenues to suppliers who remain in the market will rise.
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What is the shape of the average fixed cost curve for a firm in the short run?
a. U-shaped. b. A curve that constantly increases as output expands and eventually approaches infinity at high rates of output. c. A vertical line. d. A curve that declines as output expands and approaches the horizontal-axis when output is large.
Based on the graph showing the market for loanable funds, what will happen at a real interest rate that is lower than equilibrium?
a. Lenders will compete for borrowers and interest rates will fall.
b. Lenders will compete for borrowers and interest rates will raise.
c. Borrowers will compete for loans and interest rates will fall.
d. Borrowers will compete for loans and interest rates will rise.
Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, the highest opportunity cost for brushes in terms of combs is
A. 0.29 comb per brush. B. 0.50 comb per brush. C. 23 combs per brush. D. 0.10 comb per brush.
A legal claim against a firm that usually entitles the owner of the claim to receive a fixed annual coupon payment, plus a lump-sum payment at some future date, is known as
A. a bond. B. a share of preferred stock. C. a reinvestment coupon. D. a share of common stock.