If the slope of a demand curve is constant, then we know that
A) elasticity of demand is also elastic everywhere.
B) elasticity of demand is constant and elastic.
C) elasticity of demand is inelastic everywhere.
D) elasticity of demand varies along the demand curve.
Answer: D
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Along a linear downward-sloping demand curve, the price elasticity of demand will be
A. equal to zero across each price range. B. greater than one across each price range. C. different across each price range. D. less than one across each price range.
Which of the following best illustrates the adverse selection problem?
A) a professional football team that consistently drafts poor players B) an economic agent who engages in risky behavior once a loan is received C) an individual who hides a pre-existing condition from a health insurer D) an individual who experiences a lost of income by not working while attending college
Econville opens up trade with its neighboring countries. This causes the number of sellers of science fiction novels to increase. What happens to the equilibrium price and quantity?
a. Price and quantity both increase. b. Price decreases, and quantity increases. c. Price increases, and quantity decreases. d. Price and quantity both decrease.
Which of the following observations is true of the principle of comparative advantage?
a. It arises from the absolute cost advantage. b. It helps determine most efficient patterns of production. c. It was advanced by Adam Smith. d. It means producing a good using smaller quantities of resources than others.