If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because
A) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change.
B) profits will fall by a greater amount in the long run than in the short run.
C) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change.
D) sales revenue in the building industry will fall sharply.
C
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In the short run, the chain of causality between monetary policy and the exchange rate under fixed rates differs from a floating rate. How?
a. In a fixed rate regime, the money supply is determined first, then interest rates, then the short-run exchange rate. b. In a fixed rate regime, interest rates are determined first, then the money supply, and then the short-run exchange rate. c. In a floating rate regime, exchange rates are determined first, then the nominal interest rate (according to uncovered interest parity), and then the money supply. d. In a fixed rate regime, exchange rates are determined first, then the nominal interest rate (according to uncovered interest parity), and then the money supply.
In terms of the stock market, systematic risk refers to the fact that
A) some stocks have higher returns than others. B) some stocks' returns have a higher variance than others. C) all stock prices are correlated with the health of the economy. D) most stock prices are perfectly negatively correlated.