The demand for a product is likely to be more elastic:
A. the smaller the share of the total budget spent on the product.
B. when more complementary products are available.
C. in the short run than in the long run.
D. when more good substitutes for the product are available.
Answer: D
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One of the problems created by price floors set above the equilibrium is:
a. consumers complain about high prices. b. firms don't have incentives to reduce costs. c. the creation of surplus. d. how to cope with the shortages. e. the impact on firm profitability.
A period of significant decline in economic activity, marked by falling GDP, rising unemployment, and an increased number of bankruptcies, is called:
A. a boom. B. a recession. C. an expansion. D. a severe depression.
Which of the following would likely cause an increase in the supply of single-serve coffee makers?
A) a decrease in the number of consumers demanding single-serve coffee makers B) an increase in the price of single-serve coffee makers C) a decrease in the cost of manufacturing single-serve coffee makers D) a widespread expectation that the price of single-serve coffee makers will rise in the future
Unlike demand-pull inflation, cost-push inflation:
A. is self-limiting. B. drives up the price level. C. increases nominal income. D. increases real income.