Susan says, "If the price of wool coats goes up, suppliers will offer more of the coats for sale." Brad replies, "It takes three months to harvest wool and employ all the steps necessary to produce a wool coat. Quantity supplied cannot possibly increase for three months." Is Brad correct? Why or why not?
Brad is correct in noting the supply of wool coats is more elastic in the long run. Higher prices will bring more wool coats to the market in the future. But even in the short run, we likely will see an increase in the quantity of coats supplied. Wool destined for other uses, such as scarves, can be redirected to producing coats. Manufacturing and delivery processes can be sped up, and more coats will be available for sale relatively quickly.
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Classical growth theory predicts that increases in real GDP per person will
A) last because people make choices in the pursuit of higher profits. B) not last because higher income encourages smaller families and a lower population growth rate. C) not last because higher income leads to a population explosion. D) last because higher growth leads to new technology. E) last only if the government directs firms to make more investments in capital and new technology.
Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting
a. universal access price discrimination b. declining block price discrimination. c. mixed bundling price discrimination. d. two-part price discrimination. e. uniform pricing