The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade. This market power was obtained through:
a. illegal means
b. control of a scarce resource.
c. patent protection.
d. government licensing.
b
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Downward shifts are a. increases in both demand and supply
b. decreases in both demand and supply. c. increases in demand and decreases in supply. d. increases in supply and decreases in demand.
A tax elasticity of supply equal to 0.21 indicates that
A. Workers will cut back on the number of hours worked if tax rates increase. B. Employers will hire more workers if tax rates increase. C. Employers will not hire any workers if tax rates increase. D. Workers will not cut back on the number of hours worked if tax rates increase.
An example of a public good is
A. the car I own. B. housing subsidies. C. software produced by Microsoft. D. the fire department.
Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor. If I wanted to buy a mystery
novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct? A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel. B) She is correct. C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel. D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards.