A large enough production subsidy can turn an imported product into an exportable product.

Between September 2009 and September 2010, the recovery of private inventories, as shown in Figure 19.1, was far stronger than the overall economy's recovery from the Great Recession. Which is the most reasonable inference?

A) Persistently weak aggregate demand gave producers no alternative but to place current output into storage. B) Businesses overestimated the strength of the recovery, which lead to overstocking of inventories. C) Financial constraints had forced businesses to contract inventories by more than they otherwise would have chosen. The period beginning in September 2009 reflects the attempt by businesses to correct this. D) Generally poor weather conditions in the final months of the year in the northern hemisphere make it less costly to store goods than to transport them to consumers.

Relative percentage changes are used in measuring price elasticity of demand, so that

A) it does not matter whether price increases or decreases when calculating the elasticity. B) it does not matter what units are used to measure prices or quantities. C) we always obtain a positive number. D) larger numbers indicate greater responsiveness.