If addiction makes cigarettes such a necessity, is it correct to think that cigarettes are perfectly inelastic in both supply and demand
What will be an ideal response?
Cigarettes might be perfectly inelastic in demand over a small range of prices. However, at high enough prices there is some decrease in the quantity demanded. Some consumers would quit, others would cut down the quantity they smoke each day, and more kids would find it too costly to get started. On the supply side, a higher price will lead to more tobacco being planted, so that as time passes the quantity supplied would increase. So, as time passes the supply of tobacco is not perfectly inelastic.
You might also like to view...
Behavioral economics is an approach to the study of consumer behavior
A) that emphasizes psychological limitations and complications that potentially interfere with rational decision making. B) that emphasizes the capabilities of individuals to succeed in attaining all their unlimited wants utilizing limited resources. C) that, in contrast to standard approaches in economics, utilizes the ceteris paribus assumption. D) that, in contrast to standard approaches in economics, relies on real-world data to evaluate the usefulness of economic models.
Suppose we are at a long-run equilibrium point in an AD-AS model. Then the money supply increases. In the short run, is there any difference between what happens in the simple quantity theory of money (SQTM) version and the monetarist version of the model?
A) There is no difference. B) In the SQTM version, the price level rises; in the monetarist version, it does not. C) In the monetarist version, the price level falls; in the SQTM version, it does not. D) In the monetarist version, the Real GDP rises; in the SQTM version, it does not. E) In the SQTM version, Real GDP falls; in the monetarist version, it does not.
Which of the following will be required for a country to move up the income ladder and achieve high-income status?
What will be an ideal response?
Alex and Ben are both loggers wanting to harvest timber from the same forest. Alex prefers to harvest and replant at a sustainable rate; Ben wants to harvest as many trees as possible to maximize short-run profit, and then move on. They face the same
production costs. Refer to the information given. If property rights are poorly enforced or nonexistent: A. Ben will choose to harvest as quickly as possible, but Alex will choose to harvest more slowly and replant. B. both will harvest trees as quickly as possible, before the other one does. C. both now have an incentive to harvest and replant in a sustainable manner. D. we would expect them to form an agreement on harvesting and replanting.