In the long run, the price elasticity of demand is ________ than in the short run because ________. A) less; consumers have more time in which to make adjustments to price changes B) less; the percentage change is measured over a larger amount of time C) greater; consumers have more time in which to make […]
Date: September 10th, 2020
Understanding how individual sectors of the economy will respond to changes in key economic variables gives us a better understanding of how the macroeconomy behaves. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
In which of the following examples cited in the text is there the least amount of evidence of the potential for input substitution? A) Automobile production. B) Pipe organ production. C) French fry production. D) Production of health care services. ANSWER B
Date: September 10th, 2020
The following question is an example of microeconomic analysis, “What determines the price of gasoline in a particular city or town?” Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
According to the text there appear to be very limited opportunities for input substitution in the production of pipe organs. Which of the following is the most plausible explanation for this observation? A) Capital costs have made it too expensive to purchase more capital stock. B) It requires a large amount of highly trained labor […]
Date: September 10th, 2020
Assume the firms firms operating in an oligopolistic market experience a relatively small change in marginal costs. According to the kinked demand curve model this would: A) cause a large change in the profit-maximizing level of output. B) leave the equilibrium price unchanged. C) cause the profit-maximizing level of output to change by the same […]
Date: September 10th, 2020
Changes in the macroeconomy, such as an increase in average per person income, can have effects at the microeconomic level, for example, on the profitability of firms in a particular industry. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
As the percentage of the consumer’s income accounted for by a particular good decreases, demand for the good will: A) tend to become more price elastic. B) tend to become more price inelastic. C) tend to become closer to unit elastic. D) tend toward being perfectly elastic. ANSWER B
Date: September 10th, 2020
The evidence on the potential for input substitution in the service sector suggests that: A) there may be more opportunities for input substitution than was previously thought, especially in areas such as health care, financial services, and the even the fine arts. B) the traditional view that the potential for input substitution is extremely limited […]
Date: September 10th, 2020
Which of the following is cited as a problem with the kinked demand curve model? A) It assumes that firms do not attempt to maximize profits. B) It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost. C) It does not explain how the equilibrium market price […]
Date: September 10th, 2020
