Suppose that the percentage change in supply is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?
A. 0
B. 1
C. 2
D. 3
Answer: D
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When a perfectly competitive industry is taken over by a monopoly, some consumer surplus is transferred to the monopolist in the form of
A) marginal cost. B) economic profit. C) deadweight loss. D) taxes. E) average variable cost.
Refer to Figure 4.3. Which diagram most likely represents the indifference map for Sony PlayStations and Nintendo GameCubes?
A. A
B. B
C. C
D. D
The demand for the product of a monopolistically competitive firm is highly elastic when
A. there is a lot of product differentiation. B. there are fewer firms in the industry. C. there are a lot of close substitutes. D. firms collude.
The main risk that investment banks face from their underwriting services is:
A. the client will not pay for the service. B. the company issuing the securities will go bankrupt. C. the price paid by investors exceeds the guaranteed price to the issuing firm. D. the price investors pay for the security is less than the guaranteed price to the issuing firm.