Along a straight-line demand curve, why does the price elasticity of demand grow steadily smaller as we move from left to right?
What will be an ideal response?
As we move from left to right, the quantity keeps getting larger, so that a given numerical change in quantity becomes an ever-smaller percentage change. But, simultaneously, the price keeps going lower, so that a given numerical change in price becomes an ever-larger percentage change. So, as one moves from left to right along the demand curve, the numerator of the elasticity fraction keeps falling and the denominator keeps growing larger; thus the fraction that is the elasticity formula keeps declining.
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Income is distributed ________ equally than wealth and the Lorenz curve for ________ lies closer to the line of equality
A) more; income B) more; wealth C) less; income D) less; wealth
Investments with _____ risk usually carry a _____ return
a. higher; lower b. lower; higher c. zero; high d. higher; higher
The Bay Area in California is home to the Oakland Athletics and the San Francisco Giants. New York City is home to the Mets and Yankees. Most other cities only have one baseball team, if any at all. What is the best explanation for this phenomenon?
a. Most baseball fans, who are the demanders for baseball games, tend to live in New York and San Francisco b. Baseball team owners live in large cities, such as New York and San Francisco. c. In most baseball cities—excluding New York, San Francisco, etc.—baseball teams are natural monopolies. d. Only these four teams face downward-sloping demand curves. e. Only these four teams have declining average total costs.
Individual profit earned by Dave, the oligopolist, depends on which of the following? (i) The quantity of output that Dave produces (ii) The quantities of output that the other firms in the market produce (iii) The extent of collusion between Dave and the other firms in the market
a. (i) and (ii) b. (ii) and (iii) c. (iii) only d. (i), (ii), and (iii)