Which of the following statements is correct with respect to price elasticity of supply?
A. The price elasticity of supply tends to be greater as new firms can easily enter the market.
B. The price elasticity of supply tends to be greater as expanding existing production facilities is less costly.
C. The price elasticity of supply tends to be smaller as firms have limited production facilities.
D. All of these are correct.
Answer: D
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In agriculture, where firms producing similar goods are often located near each other, supervision of neighboring firm activity is fairly easy. When these firms come together formally to agree on price and restraint of output, their organization is called a(n)
a. collusive venture b. cartel c. cooperative d. agricultural merger e. conglomerate
Quotas generate tariff revenues for the government.
Answer the following statement true (T) or false (F)
A personal tax cut of $50 billion will affect income differently than an increase in government spending by $50 billion because
A. households may save part of the additional income from the tax cut. B. the increase in government spending is less expansionary than the increase in taxes. C. the increase in government spending will produce a political business cycle. D. households may consume more than the additional income from the tax cut.
The economy is in its short run equilibrium at the point where the
A) price level is stable. B) SAS curve intersects the LAS curve. C) AD curve intersects the LAS curve. D) AD curve intersects the SAS curve.