If, for a producer, large changes in price lead to relatively small changes in quantity, the producer's
A) demand is price elastic.
B) demand is price inelastic.
C) supply is price elastic.
D) supply is price inelastic.
D
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Suppose that you face a gamble that has a payoff of $1000 with probability 0.2 and a payoff of $200 with probability 0.8. I approach you to sell you insurance with a premium of p and a benefit of b. Which combinations of p and b are actuarily fair?
A. p=8, b=10 B. p=400, b=500 C. p=720, b=900 D. (a) and (b) are actuarily fair E. (a) and (c) are actuarily fair F. (b) and (c) are actuarily fair G. All of the above. H. None of the above.
If purchasing-power parity holds, then the value of the
a. nominal exchange rate is equal to one. A dollar buys as many goods in the U.S. as it does overseas. b. nominal exchange rate is equal to one. A dollar buys the quantity of foreign currency equal to the U.S. price level divided by the foreign country's price level. c. real exchange rate is equal to one. A dollar buys as many goods in the U.S. as it does overseas. d. real exchange rate is equal to one. A dollar buys the quantity of foreign currency equal to the U.S. price level divided by the foreign country's price level.
Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that
A. removal of the tariff would cause domestic output to fall even further and the price to fall to consumers. B. the tariff had been imposed to counteract dumping and had been successful. C. removal of the tariff would actually cause domestic output to increase and price to fall. D. the tariff had been imposed to protect an infant industry and that the industry still needed protection.
The law of diminishing marginal utility implies that as a household consumes more of a product, its total utility will increase by smaller amounts, assuming marginal utility remains positive.
Answer the following statement true (T) or false (F)