In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?
A. when the item's share of expenses in consumers' budgets is very small
B. when there are very few producers of the item
C. when there are very few close substitutes for the item
D. when there is considerable time to adjust to a change in the price of the item
Answer: D
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The real wage rate is defined as the wage rate divided by
a. the interest rate. b. the money supply. c. nominal GDP. d. the price level.
State and local governments receive most of their revenue from
A) sales and excise taxes, revenue from the federal government, and property taxes. B) individual income taxes, social insurance contributions, and property taxes. C) corporate income taxes, property taxes, and personal income taxes. D) property taxes, sales and excise taxes, and Social Security contribution.
Determinants of the price elasticity of supply are:
A. adjustment time, whether the good is a luxury or a necessity. B. availability of inputs, adjustment time. C. flexibility of the production process, whether the good is a luxury or a necessity. D. availability of inputs, whether the good is a luxury or a necessity. AACSB: Reflective Thinking
Suppose a legislation passed by the government encourages domestic oil exploration thereby reducing petroleum imports substantially. If the cost of production is uniform for all producers, which of the following will be observed in the petroleum market?
a. The world price of petroleum would decline. b. The domestic price of petroleum would decline. c. The world price of gasoline will remain unaffected. d. Crude oil consumption in the domestic and the world market would decrease.