Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:
A. people spend a large share of their income on the product.
B. people spend an insignificant share of their income on the product.
C. the population in the market area is large.
D. there are many good substitutes for the product.
Answer: B
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Historically, empirical evidence showed that it was more cost effective to have a single generator of electricity serve a particular region's electricity needs than to have several smaller units compete against each other
More recently, technological advances have occurred in the generation of electricity that allow much smaller generating units to produce electricity for the same average cost as much larger units. Explain how this change would be reflected in the firm's long-run average cost curve and minimum efficient scale.
A change in supply cannot be caused by a change in:
a. resource prices. b. technology. c. prices of other goods. d. the price of the good itself. e. the number of suppliers.