In general, the greater the elasticity, the:
A. smaller the responsiveness of quantity to changes in price.
B. larger the responsiveness of quantity to changes in price.
C. larger the responsiveness of price to changes in quantity.
D. smaller the responsiveness of price to changes in quantity.
Answer: B
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A needy family consisting of a mother and three children currently receives cash benefits that average $12 per day. The mother of this family is allowed to earn an average of $4 per day before her benefits begin to decline. After that, for each dollar earned, cash benefits decline by 67 cents for each dollar earned. Assume that she can find work at $4 per hour. How many hours will she have to work per day before her benefits are eliminated?
What will be an ideal response?
An externality
A) may be positive or negative. B) means a rapidly rising cost borne by consumers. C) is the cost of producing a good outside the United States. D) is the indirect cost, the overhead, of producing a product.
If the government charged a tax on monopolists equal to, say, 75 percent of their economic profits, what would happen to the level of output the firm would produce? What about the price? Explain.
What will be an ideal response?
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers was $12, then total producer surplus would be:
A. $9. B. $30. C. $17. D. $7.