The National Restaurant Association states that the restaurant industry has an economic effect of more than $1.7 trillion annually in the United States,
with every dollar spent in restaurants generating an estimated total of $2.05 in spending in the economy. This indicates that the spending multiplier for the restaurant industry is equal to
A) 1.21. B) 1.70. C) 2.05. D) 4.25.
C
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In the long run, new firms can enter an industry and so the supply elasticity tends to be:
A. more elastic than in the short run. B. less elastic than in the short run. C. perfectly inelastic. D. perfectly elastic.
Suppose drug companies come out with new wonder-drugs capable of curing the common cold. What is the most likely effect on the demand for physicians' services?
A) The demand will become more elastic. B) The demand will become more inelastic. C) The demand will decrease if government or private insurance pays all or most of the physicians' fees. D) The demand will increase if the drugs can only be obtained with a physician's prescription. E) The demand will not change, though the quantity demanded almost certainly will.