The price elasticity of demand for an exhaustible natural resource tends to
A. fall over time because extraction costs rise over time.
B. stay constant over time because the resource’s price rises at a constant rate.
C. rise over time because the resource’s rising price stimulates conservation and the development of substitutes.
D. rise over time because resource extraction tends to become more efficient over time.
Answer: C
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Suppose the market-clearing price of wheat is $2.50 per bushel. What would happen if wheat farmers persuaded the government to set a legally-mandated price support of $3.75 per bushel?
A) The quantity demanded of wheat would fall. B) The quantity supplied of wheat would rise. C) A surplus of wheat would occur. D) All of the above.
What is the distinction between expected wealth and expected utility?
What will be an ideal response?
An agreement with another country in which it agrees to import more from the United States is called a
A) VRA. B) VIE. C) VAR. D) VAT.
If quantity demanded does not change when the price changes, the demand:
A. is perfectly inelastic. B. is elastic. C. is inelastic. D. has unit elasticity.