M3-The Economic Workplace Flashcards
Elasticity of demand or supply is a measure of how sensitive the demand for or the supply of a product is to a change in its price. (true or false)
true
Product demand is more elastic when more substitutes are available. (true or false)
true
The longer the time period, the more product demand becomes elastic because more choices are available.
Product demand is more inelastic when few substitutes are available.
If demand is price INelastic, an increase in price will result in an increase in total revenue (positive relationship). (true or false)
true
If demand is price Elastic, an increase in price will result in a decline in total revenue (negative relationship). (true or false)
true
If demand is UNIT elastic, a change in price will have no effect on total revenue. (true or false)
true
An inferior good is one for which the demand declines as income increases. A normal good would experience an increase in demand in response to an increase in income. (true or false)
true
When a good is demanded, no matter what the price, demand is described as perfectly inelastic. The demand “curve” is a vertical line at the quantity demanded with price making no difference. (true or false)
true
A government price support program acts as a subsidy that will encourage suppliers to increase supply beyond an equilibrium point (the point where supply and demand curves intersect). This excess of supply over demand will create surpluses in the market. (true or false)
true
In microeconomics analysis, in the long run all supply side inputs are variable. In accounting terms, this means that in the long run all costs are variable. (e.g., the fixed cost of depreciation of a factory building becomes a variable costs when a second factory building is added. ) (true or false)
True
Collusive pricing anticipates that competitors will collude or conspire to maintain prices and mutual profitability. Collusive pricing undermines competitive pricing and maintains prices to external customers at levels higher than they would be in a competitive market place. (true or false)
true
