In the long run, all inputs are variable
Indicate whether the statement is true or false
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For each of the following pairs of products, discuss which of the two would be expected to be more price elastic and explain why.
i. water vs. diamonds ii. insulin vs. cough syrup iii. meat vs. filet mignon iv. gasoline right after a major hurricane vs. gasoline over that entire summer
Which of the following functions do prices perform?
a. prices serve as a rationing device for allocating scarce goods and services b. prices help determine incomes c. prices ration consumer demand d. All of these.
The use of pollution charges to reduce pollution confronts the problem of
a. free riders who avoid revealing benefits from abatement. b. determining specific individual damages and appropriate charges associated with pollutants. c. necessarily lowering the price of the products. d. requiring no agency to administer the tax.
Which of the following statements about opportunity costs is TRUE?
I. The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions. II. Opportunity costs only measure direct out of pocket expenditures. III. To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action. a) III only. b) I and III only. c) II only. d) None of the statements is true.