Refer to the figure above. The elasticity of supply for a product will be 2 when:
A. a 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied.
B. a 1 percent decrease in price causes a 2 percent decrease in quantity supplied.
C. a 2 percent decrease in price causes a 1 percent decrease in quantity supplied.
D. a 2 percent decrease in price causes a 2 percent decrease in quantity supplied.
Answer: B
You might also like to view...
The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
Differentiate between an oligopoly and a monopolistic competition on the basis of the number of firms and the degree of product differentiation
What will be an ideal response?
If firms differentiate their products in different ways and charge different price because of these differentiation factors, then
A) demand must be perfectly elastic. B) the law of one price is not violated. C) transactions costs are being ignored. D) the firm must not be maximizing profit.
The aggregate demand curve
A) is like individual demand curves in that prices of other goods are held constant. B) is like individual demand curves in that income is constant. C) differs from individual demand curves in that the aggregate demand curve is not downward sloping. D) differs from individual demand curves in that the aggregate demand curve looks at the entire circular flow of income and product while the individual demand curve looks at only one good.