For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. The relevant time horizon is short.
b. The good is a luxury.
c. The market for the good is narrowly defined.
d. There are many close substitutes for this good.
a
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What will be an ideal response?
The flaw of the Real Business Cycle model is that it
A) assumes away output fluctuations. B) assumes complete wage rigidity. C) assumes unrealistic fooling of workers. D) requires procyclical wage movements and continuous labor market equilibrium.
In the absence of environmental policy, the number of tires produced in a competitive market is
Use thefollowing information for any or all of Questions 16 through 18. Suppose the marginal benefits and marginal costs of tire production in the U.S. are modeled as follows, where Q is in millions: MSB = 12 – 0.4Q MPB = 12 – 0.3Q MSC = MPC = 2 + 0.1Q a. 20 million c. 4 million b. 25 million d. none of the above
In the above figure, total cost for this profit-maximizing monopolistically competitive firm is
A. $70,000. B. $50,000. C. $72,000. D. $91,000.