What does the price elasticity of demand measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?
QUESTION 2If resource prices rise and the per-unit cost of producing a product increases as the firms in an industry expand output in response to an increase in demand, the long-run market supply curve for the product will:
a. be perfectly elastic (a horizontal line).
b. be perfectly inelastic (a vertical line).
c. slope upward to the right.
d. be more inelastic than the short-run supply curve for the product.
QUESTION 3Applying supply and demand analysis, other factors held constant, the steeper the supply curve (more elastic), the larger the burden of a sales tax that is borne by the sellers.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4If the expansion of output in an industry leads to unchanged resource prices, the industry is most likely to be a(n):
a. decreasing cost industry.
b. increasing cost industry.
c. constant cost industry.
d. industry characterized by economies of scale.
QUESTION 5Supply-demand analysis shows that a tax collected from sellers is always fully shifted to buyers.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6In a constant cost industry:
a. a natural monopoly is likely to occur.
b. total cost is the same, no matter how much a firm produces.
c. the long-run supply curve will be perfectly elastic.
d. entry of new firms in the industry will lead to a reduction in the cost of inputs.
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