A perfectly elastic demand curve for a firm
A. is represented by a vertical line.
B. means that with every unit price increase there will be a unit decrease in demand.
C. is formulated by P× Q = a constant, for all prices and quantities.
D. indicates that any increase in price will eliminate all purchases of its product.
Answer: D
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Suppose the domestic market demand function in a certain market where Q is measured in thousands of units is Qd = 20 - 2.5P, and the domestic market supply function is Qs = 2.5P - 7.5. Suppose further that the world price for the good in question is $3.40 per unit. Under conditions of free trade, how much consumer surplus will there be?
A. $26,450 B. $26,650 C. $52,900 D. $53,300
A firm's profit is
a. greater if it is a corporation rather than if it is a sole proprietorship b. higher if it raises its price than if it does not c. lower if it lowers its price than if it does not d. never taxed by the government e. its revenue minus its costs
Which one of the following was a secondary effect of the stock market crash of 1929?
a. an increase in the money supply in the early 1930s b. a decline in consumption expenditures because of the reduction in the wealth of stockholders c. an increase in the supply of loanable funds as people transferred funds from the stock market into savings accounts d. an increase in tax revenues as the sellers of stocks paid the capital gains tax on stocks that had appreciated during the 1920s
Refer to Exhibit 2-8. If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade, ____________________ can consume a combination of goods that lies beyond her PPF.
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