The value of price elasticity of demand is more likely to be above 1 if:
a. consumers have a long time to adjust to a price change.
b. the product is a necessity.
c. demand is inelastic.
d. there are few close substitutes for the product.
e. total revenue declines in response to a price reduction.
a
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The demand for microwaves in a certain country is given by: D = 8,000-30P, where P is the price of a microwave. Supply by domestic microwave producers is: S = 4,000 + 10P. Suppose the economy is closed. The equilibrium price of a microwave is ________ and equilibrium quantity is____.
A. $100; 5000 B. $125; 4000 C. $50; 8000 D. $75; 6000
Which of the following actions should be discussed with an attorney before undertaking as the action could be considered legal?
A) an agreement with a competitor firm not to bid on a contract B) an agreement with a competitor firm to set prices C) an exclusive dealings contract with a customer D) an agreement with a competitor firm submit a low bid on a contract
One way to ensure all producers benefit from a price floor is to:
A. give a government guarantee to buy all surplus. B. ration a certain quantity per consumer. C. ration a certain quantity per producer . D. All of these are examples of ensuring all producers benefit using non-price methods.
The average number of times each dollar is used per year to buy goods and services in the economy is called the
A. velocity of circulation. B. equation of exchange. C. law of demand. D. law of diminishing returns.