If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________
A) infinite; vertical
B) zero; vertical
C) zero; horizontal
D) infinite; horizontal
D
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The long-run market supply curve for an increasing-cost, perfectly competitive industry
a. is horizontal b. slopes upward c. is the portion of its marginal cost curve above the minimum point on its average variable cost curve d. is the portion of its marginal cost curve above the minimum point on its average total cost curve e. is vertical
Refer to the information provided in Figure 3.14 below to answer the question(s) that follow.
Figure 3.14Refer to Figure 3.14. If this market is unregulated and the price is currently $30, you would expect that the price of sunglasses would
A. rise to $90, so the firm could meet its excess demand. B. remain at $30, because firms would not want to increase the price. C. rise to $60, where quantity demanded equals quantity supplied. D. rise, but the new price is indeterminate from the information provided.
As a consumer spends a larger share of his income on a particular good, the price elasticity of demand for that good:
A) increases. B) decreases. C) initially decreases then increases. D) remains the same.
The figure above shows the market for annual influenza immunizations the United States. The market equilibrium with no government intervention is ________ because health care generates ________
A) efficient; positive external benefits B) inefficient; positive external benefits C) inefficient; positive external costs D) efficient; positive external costs E) inefficient; public goods