Is it possible for the total market demand for a good at the prevailing price to be inelastic while the demand facing any one seller of the good is highly elastic?
A) No, because each seller's demand is a part of the total demand.
B) No, because if this were the case the price would fall until the market demand became elastic.
C) No, because if this were the case the price would rise until the market demand became elastic.
D) Yes, and it's actually quite common.
D
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Which of the following factors is NOT part of the budget equation?
A) relative prices B) real income C) quantities of goods D) preferences
Refer to Figure 19-4. The equilibrium exchange rate is at A, $3/pound. Suppose the British government pegs its currency at $4/pound. Speculators expect that the value of the pound will drop and this shifts the demand curve for pounds to D2
After the shift, A) there is a surplus of pounds equal to 400 million. B) there is a shortage of pounds equal to 600 million. C) there is a shortage of pounds equal to 200 million. D) there is a surplus of pounds equal to 600 million. E) there is a shortage of pounds equal to 400 million.