The demand for salt is relatively price inelastic, while the demand for pretzels is relatively price elastic. How can you best explain why?
What will be an ideal response?
Salt has few substitutes, and takes up a small percentage of the consumer's budget, and thus demand is likely to be inelastic. While pretzels are also a small part of the budget, there are many substitutes available.
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Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:
A. decreasing. B. relatively elastic. C. perfectly elastic. D. relatively inelastic.
Last month Laura saw the value of her stock portfolio rise by $20,000. This month she saw the value of her portfolio decline by $20,000. According to behavioral economics:
A. the positive utility Laura received from seeing her portfolio value rise was equal to the disutility she felt when its value declined. B. Laura should not invest in stocks unless the utility she receives from gains is at least as great as the disutility she feels from losses. C. the positive utility Laura received from seeing her portfolio value rise was greater than the disutility she felt when its value declined. D. the positive utility Laura received from seeing her portfolio value rise was less than the disutility she felt when its value declined.
An implication of the downward slope of the demand curve for a monopolistic competitive firm is that
A) its marginal revenue curve slopes upward. B) its marginal revenue curve is the same as the demand curve. C) its marginal revenue curve slopes downward but lies above the demand curve. D) its marginal revenue curve slopes downward but lies below the demand curve.
Economic profits are
A. equal to accounting profits plus the implicit costs of the firm. B. whatever remains after all opportunity costs have been taken into account. C. always greater than accounting profits. D. the same as accounting profits when firms do not own capital equipment.