Draw the demand curve for a good whose price elasticity of demand is equal to zero. Be sure to label both axes. Explain what the graph represents.
What will be an ideal response?
The demand curve in the graph is a vertical line, indicating that the quantity of the good demanded will not change no matter what happens to its price. In terms of the calculation of the price elasticity of demand, the change in quantity is zero and so, therefore, is the calculated value of the price elasticity.
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In the long run, a reduction in labor supply would cause output to ________ and the aggregate price level to ________
A) fall; rise B) fall; fall C) rise; fall D) rise; rise
What is marginal cost?
When real GDP is falling, the economy is experiencing
a. a recession. b. a financial crisis. c. an expansion. d. equilibrium. e. environmental deterioration.
The percentage of the burden of an excise tax that is borne by sellers generally depends on the
a. size of the tax. b. relationship between the elasticity of demand and the elasticity of supply. c. elasticity of demand. d. elasticity of supply.