Suppose that the percentage change in demand is 10%, the price elasticity of demand is 1, and the percentage change in the equilibrium price is 3.33%. What is the price elasticity of supply?
A. 0
B. 1
C. 2
D. 3
Answer: C
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Why does a sports car cost more than a mountain bike?
A) because sports car manufacturers are greedier than mountain bike manufacturers B) because sports cars are priced higher in order to make them attractive as status symbols C) because more scarce resources are required to produce a sports car than to produce a mountain bike D) because mountain bike manufacturers know that their customers have relatively low incomes
A manager invests $400,00 . in a technology to reduce overall costs of production. The company managed to reduce their cost per unit from $2 to $1.85 . After a year, the manager has an opportunity to outsource production to another company at a cost per unity of $1.75 . If you are the manager, you
a. should consider the $400,00 . as sunk cost and therefore it should not be relevant to the decision. b. should base your decision upon economic profit and not accounting profit c. should avoid the fixed-cost fallacy d. all the above
In the long-run, the entry of new firms in a competitive market shifts the aggregate supply curve to the left
a. True b. False Indicate whether the statement is true or false
The price of a good will rise when:
A. there is a shortage of the good. B. there is a surplus of the good. C. demand for the good decreases. D. the supply of the good increases.