Which of the following statements is true?
A) In general, if a product has few substitutes it will have an elastic demand.
B) The more time that passes the more inelastic the demand for a product becomes.
C) The demand curve for a necessity is more elastic than the demand curve for a luxury.
D) The more narrowly we define a market, the more elastic the demand for a product will be.
D) The more narrowly we define a market, the more elastic the demand for a product will be.
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In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing slower than potential real GDP?
What will be an ideal response?
In the Keynesian view, a reduction in the marginal income tax rate would cause
a. output to rise and the price level to fall. b. both output and the price level to rise. c. output to rise with the price level unchanged. d. the price level to rise with output unchanged.
Suppose MRS is not the same across all consumers. In this case, the economic outcome is not fully efficient because:
A) exchange is inefficient. B) the use of inputs in production is inefficient. C) the mix of outputs in inefficient. D) none of the above
The monopolistic competitor
A. produces a good or service that has no close substitutes. B. is usually a small firm. C. has very little competition. D. is protected by substantial barriers to entry.