Along a linear or straight-line demand curve, demand is more elastic at higher prices.
Answer the following statement true (T) or false (F)
True
Elasticity changes its value along a linear demand curve. At the top of the demand curve, a small change in price will be result in an elastic response. Consumers are more sensitive to prices the higher they are, which results in elastic demand. At lower prices, moving down a linear demand curve, because these purchases are very cheap, consumers are not as sensitive to a price change.
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Assume that initially country A exchanges three barrels of oil for one ton of steel from country B. Later the arrangement changes to four barrels of oil for one ton of steel. This indicates that:
a. the terms of trade for country B have improved. b. country A has a comparative advantage in the production of steel. c. the relative price of steel in terms of oil has fallen. d. the terms of trade for country A have improved. e. country B has an absolute advantage in the production of oil.
In a competitive market, a firm's supply curve dictates the amount it will supply. In a monopoly market the
a. same is true. b. supply curve conceptually makes sense, but in practice is never used. c. supply curve will have limited predictive capacity. d. decision about how much to supply is impossible to separate from the demand curve it faces.
What is the distribution of national income currently among the owners of the factors of production—land, labor, capital, and entrepreneurship?
What will be an ideal response?
Use the graph below to answer the next question.
Other things equal, an increase in the price of a complementary resource would cause a
A. move from b to a on D1. B. shift from D2 to D3. C. shift from D3 to D2. D. move from a to b on D1.