A marketing student observes that when the price of ice cream rises by 10 percent, the quantity of ice cream a supplier is willing to sell rises by 5 percent. The student correctly concludes that the elasticity of supply for ice cream is:
A. 2.
B. .2.
C. .5.
D. 5.
Answer: C
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Economics is the study of
a. scarcity under conditions of democracy b. choice within a system of free speech c. financial markets d. the role of government in a market system e. choice under conditions of scarcity
Federal Reserve policy makers argue about whether productivity is increasing faster than it has in the past. If productivity is growing faster than anticipated, they would expect the:
A. short-run aggregate supply curve to be shifting down (to the right). B. aggregate demand curve to be shifting to the left. C. short-run aggregate supply curve to be shifting up (to the left). D. aggregate demand curve to be shifting to the right.
Developing countries do:
A. compete with one another for foreign investment, and this competition reduces the benefits from foreign investment. B. not compete with one another for foreign investment, because they have sufficient domestic saving to finance their investment needs. C. not compete with one another for foreign investment, because they lack the infrastructure to attract it in the first place. D. compete with one another for foreign investment, but this competition is beneficial to developing countries because it insures a more efficient allocation of resources.
Plastics manufacturers can make either toys or plastic containers. If the prices and profitability of plastic toys increase, then the:
A. Demand for plastic containers will decrease B. Supply of plastic containers will increase C. Demand for plastic containers will increase D. Supply of plastic containers will decrease