Assume that in the market for widgets, demand is highly elastic compared to supply. If input costs for producing widgets drop, what happens to equilibrium price and quantity? Explain.
Ans) If input costs for producing widgets drop, the cost of production decreases so supply increases and shifts to the right. The equilibrium price decreases and equilibrium quantity increases.
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Holding other factors constant, an incline in the price of new capital goods will:
A. decrease investment. B. decrease national saving. C. increase investment. D. increase national saving.
Suppose a decrease in price increases quantity demanded from 8 to 12. Using the mid-point formula, the percentage change in quantity demanded is:
A. 0.1, and is elastic. B. 40 = 400 percent. C. 0.40 = 40 percent. D. 0.40 = 40 percent.
If the price of a Canadian dollar went from 0.95 US dollars to 0.98 US dollars, we would say that the US dollar has
a. Appreciated b. Depreciated c. Not changed in value d. None of the above
The largest value the Herfindahl index can have is
a. 100, which would indicate a monopoly b. 100 for firms equal in size c. 100,000 d. 10,000 . which would indicate a pure monopoly e. infinity