Suppose that the demand for electricity has been found to be price inelastic. The most likely explanation for this finding is that:
A. electricity is a luxury good.
B. electricity is sold in a monopoly market.
C. the fraction of income spent on electricity is large.
D. few substitutes for electricity exist.
Answer: D
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Companies that reduce their margins on export products in the face of appreciation of their home currency may be motivated by a desire to
a. sacrifice market share abroad but build market share at home b. increase production volume to realize learning curve advantages c. sell foreign plants and equipment to lower their debt d. reduce the costs of transportation e. all of the above
It would be more reasonable to use annual income data as an index of economic inequality if all of the households
a. filed tax returns and thus all their income were known. b. were different with regard to their age and size characteristics. c. were more similar with regard to size, age, education, and other major factors that are linked to income. d. were more similar with regard to their hair color, height, and weight.