Microeconomics

Market clearing prices can be volatile in a market with inelastic dema

Market clearing prices can be volatile in a market with inelastic demand and inelastic supply. Indicate whether the statement is true or false   ANSWER T The intersection of demand and supply will not move far in the quantity dimension, but can move up and down considerably in the price dimension. See Figure 18.1.  

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Date: September 9th, 2020

Short-run demand for electricity can be quite elastic because consumer

Short-run demand for electricity can be quite elastic because consumers can change when they consume electricity. Indicate whether the statement is true or false   ANSWER F Even with time-of-use pricing, consumers often don’t even know the price of electricity and their lack of responsiveness to price changes keeps their demand inelastic.  

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Date: September 9th, 2020