Which of the following statements about elasticity of supply is true?
a. Elasticity of supply is always unity.
b. Elasticity of supply is always zero.
c. Elasticity of supply is always negative.
d. Elasticity of supply is always positive.
QUESTION 2The primary goal of any business firm is to maximize social welfare.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3If a particular perfectly competitive industry uses only a small fraction of the supply of any of its inputs, the long run supply curve for that industry will tend to be:
a. vertical.
b. upward sloping.
c. horizontal.
d. downward sloping.
QUESTION 4Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. What is the opportunity cost of producing coffee in Chile?
a. Half a pound of sugar
b. Two-fifth of a pound of sugar
c. 2 pounds of sugar
d. One-third of a pound of sugar
e. 4 pounds of sugar
QUESTION 5If two commodities are complements then:
a. the cross-price elasticity will be zero.
b. the cross-price elasticity will be one.
c. the cross-price elasticity will be negative.
d. the cross-price elasticity will be positive.
QUESTION 6The entry of new firms into a market stops when:
a. the accounting profit of existing firms falls to zero.
b. the general price level in the economy rises.
c. the rate of interest in the economy declines.
d. the economic profit of existing firms falls to zero.
e. the corporate taxes are relaxed.
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