Production Possibility Frontier

The production-possibility frontier of a country can be said to shift outward as a result of the following. Which, if any, is the wrong explanation? A) Expenditures on new plants and equipment are constantly being made. B) The population increases. C) Better methods of production are developed. D) New oil finds are m ...continues

Price

29. A shortage of OPEC oil raises oil prices because of: A) the law of elastic supply. B) the law of elastic demand. C) the downward-sloping demand curve. D) all of the above. E) none of the above.

Excise tax - supply curve

The government levies an excise tax of 5 cents per unit sold on the sellers in a competitive industry. Both supply and demand curves have some elasticity with respect to price. This tax means that the: A) supply curve shifts to the left by 5 cents, but (unless demand is perfectly elastic) price will not rise. B) supply c ...continues

Price Elasticity - Demand Curve

If consumers have budgeted a fixed amount of money to buy a certain commodity, and within a certain range of prices will spend neither more nor less than this amount on it, then their demand curve in this price range would be properly designated as: A) in equilibrium. B) perfectly price elastic. C) perfectly price inela ...continues

Demand Curve Properties

36. A straight-line demand curve has which of the following properties? A) Constant slope and varying price elasticity. B) Constant income elasticity with varying slope. C) Varying slope and varying supply elasticity. D) Constant slope and constant price elasticity. E) None of the above may be asserted in general. ...continues

Equilibrium

During the first year that the Salk vaccine for infantile paralysis became available, the quantity produced was too small to inoculate all those in susceptible age groups. Although the cost of production and the price were not particularly high, production could not be expanded rapidly enough to meet the demand. The government ...continues

Supply and Demand, Price

For a given increase in supply, price will fall most when demand is relatively A) inelastic and supply is relatively inelastic. B) inelastic and supply is relatively elastic. C) elastic and supply is relatively inelastic. D) elastic and supply is relatively elastic. E) any of the above.

Demand Curve - Elasticity

Suppose that successive price reductions reduce total revenue. The supplier faces a demand curve that is, in this region: A) price elastic. B) unitary elastic. C) infinitely price elastic. D) of indeterminate elasticity. E) price inelastic.

Effect of rent control on supply/demand

Suppose that a large city is investigating the elimination of rent controls on housing at a time when the vacancy rate is extremely low-only 1 percent of all apartments in the city are vacant. Which of the following is most likely to occur if rent controls are eliminated? A) An increase in the demand for housing, followed by ...continues

Normal Goods

A good is defined as "normal" when consumers buy more of it when income increases and less of it when income decreases. For a normal good, the substitution effect of a price increase: A) pushes the quantity demanded down along with the income effect. B) pushes the quantity demanded down enough that the income effect cannot ...continues