"The price elasticity of demand for a particular good is smaller in the long run because consumers adapt to higher prices over time." Do you agree or disagree? Explain
What will be an ideal response?
Disagree. Price elasticity of demand is related to a particular good rather than all the goods that individuals may consume. In the long run, consumers can find more substitutes. Thus, the price elasticity of demand of a particular good is actually greater in the long run than in the short run.
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When comparing perfect competition to a single-price monopoly with the same costs
A) both market types use resources efficiently. B) there is a deadweight loss associated with a monopoly. C) the sum of producer and consumer surplus is maximized under a monopoly. D) the sum of producer and consumer surplus is minimized under perfect competition.
Most of the money that we pay to foreigners to finance our current accounts deficit
A. flows back to the U.S. in investment funds. B. stays abroad where it circulates as currency. C. ends up in the hands of drug dealers. D. is used by foreign governments as reserves.
The demand curve for a factor is that part of the MRP where marginal product is
a. rising. b. falling. c. positive. d. negative.
The "other things being equal" clause in the law of demand does allow which of the following factors to change?
A. Consumer income. B. The prices of other goods. C. Consumer tastes and preferences. D. The price of the good being demanded.