The price elasticity of demand for a particular commodity depends upon all of the following except
A. availability of complementary goods.
B. the percentage of a? consumer's total budget devoted to purchasing that commodity.
C. the number of close substitutes for that commodity.
D. the length of time allowed for price changes of that commodity.
Answer: A. availability of complementary goods.
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Game theory is not useful in understanding perfect competition because in a perfectly competitive market:
A. there are too many firms to be able to model their behavior accurately using game theory. B. no single firm can influence the market price, so firms' decisions are not interdependent. C. the payoffs to firms' choices are unknown. D. each firm only cares about its own profit, so there is no interdependence.
Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
According to the Taylor rule, the Federal Reserve raises the real interest rate as the output gap ________ or the inflation rate ________.
A. increases; decreases B. decreases; increases C. decreases; decreases D. increases; increases
While producing on the production possibilities frontier, if additional units of a good could be produced at a constant opportunity cost, the production possibilities frontier would be
A) bowed outward. B) bowed inward. C) positively sloped. D) a straight line.