If price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week. The price elasticity of supply is
a. 1/2 = 0.5
b. 1.0
c. 11/6 = 1.8333
d. 9/4 = 2.25
e. 2.0
E
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Indicate whether the statement is true or false
Technology reduces the average cost of production, so in the long run
i. perfectly competitive firms produce at a lower average cost. ii. the market price of the good falls. iii. firms with older plants either exit the market or adopt the new technology. A) i only. B) i and ii. C) iii only. D) i and iii. E) i, ii, and iii.
Which of the following occurs simultaneously with an income effect?
A. substitution effect B. preferences effect C. backward-bending supply curve D. Giffen good effect
An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply. B. increase in aggregate demand. C. increase in short-run aggregate supply. D. decrease in aggregate demand.