Which of the following examples would likely have the highest elasticity of demand if the price of the product changed?
a. Jana spends $10,000 of her weekly paycheck of $40,000 on an automobile.
b. Roberta spends $400 of her weekly paycheck of $2,000 on a video game player.
c. Terence spends $100 of his weekly paycheck of $1,500 on a theater ticket.
d. Seo-jun spends $1,500 of his weekly paycheck of $3,000 on a motorcycle.
d. Seo-jun spends $1,500 of his weekly paycheck of $3,000 on a motorcycle.
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Refer to Goods X and Y. When the price of good X rises, what happens to the budget line?
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. a. The budget line shifts in, with no change in the slope. b. The budget line becomes flatter, and the horizontal intercept moves to the right. c. The budget line becomes steeper, with no change in the vertical intercept. d. The budget line pivots about the horizontal intercept, with the vertical intercept moving up.
Which best describes the relationship between the cost of acquiring information and return?
A) A high return must compensate for a high cost of acquiring information. B) A higher cost of information corresponds with a low return. C) A low cost of acquiring information corresponds with a high return. D) A higher return results in a lower cost of acquiring information.
If a firm is earning short-run economic profits shown in the above figure, in the long run
A) firms exit the industry, the market supply curve shifts rightward, and the market price falls. B) firms enter the industry, the market supply curve shifts rightward, and the market price falls. C) firms exit the industry, the market supply curve shifts leftward, and the market price falls. D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.
A monopoly exists when
A. One firm produces all the output for a particular good or service. B. The government intervenes on behalf of consumers. C. A large number of firms are producing a good. D. A small number of firms are the only producers of a good.