See Scenario 4.5. If P = $1,000, the price elasticity of demand:
A) is 0,
B) is negative infinity.
C) is -0.18.
D) cannot be determined without knowing I and Ph.
C
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If a firm accumulates unwanted inventories, then it
A) must hire more workers. B) will increase its production. C) has actual investment equal to its planned investment. D) will decrease its production. E) has actual investment that is less than its planned investment.
Refer to Figure 4-6. At the equilibrium price of P1, consumers are willing to buy Q1 pounds of granola. Is this an economically efficient quantity?
A) No, the marginal cost of the last unit (Q1 ) exceeds the marginal benefit of the last unit. B) No, the marginal benefit of the last unit (Q1 ) exceeds the marginal cost of that last unit. C) Yes, because P1 is the price where marginal benefit equals marginal cost. D) Yes, because marginal cost is zero at the price of P1.