Which of the following best describes a good with perfectly elastic supply?
A) Any increase in the price of the good leads to an increase in the seller's revenue.
B) Any increase in the price of the good decreases the quantity supplied of the good by more than the price change.
C) Any increase in the price of the good will induce the firm to supply an infinite quantity of the good.
D) Any increase in the price of the good increases the quantity supplied of the good exactly by the amount of the price change.
C
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The rule of thumb for a government deciding whether to provide a public good is that the: a. marginal cost of the good should be less than the marginal benefit
b. opportunity cost of the good should be greater than the marginal benefit. c. sunk cost of the good should be equal to the marginal benefit. d. variable cost of the good should be greater than the sunk cost.
A nominal, bilateral exchange rate is:
a. The weighted-average value of a currency relative to many foreign currencies. b. The nominal, effective exchange rate adjusted for a nation's price level relative to many foreign countries' prices. c. The same as the nominal, effective exchange rate. d. The value of one currency in terms of another currency.
Economists believe the Cost-Benefit Principle is:
A. a comprehensive description of all the factors that influence people's choices. B. an interesting intellectual exercise with little applicability to the real world. C. a simple but useful model of how people should make choices. D. of little use to those who wish to learn how to make better decisions.
The effect on the market for heating oil of a leftward shift of supply would be
A. a shortage of heating oil. B. a surplus of heating oil. C. a decrease in the quantity of heating oil sold and in its price. D. an increase in the price of heating oil and a decrease in the quantity sold.