Arrange the following goods from least to most elastic, explaining your ordering: gasoline, Exxon gas, Exxon gas at a particular gas station.
What will be an ideal response?
Gasoline is least elastic since there are few substitutes for the entire category of this good in the operation of cars. Exxon gas at a particular station is most elastic since one can substitute other Exxon stations or other brands of gas.
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Refer to Table 9-11. Which country has a comparative advantage in producing clocks?
A) Belize B) Denmark C) both countries D) neither country
A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65 . In the long run, the firm should
a. Shut down since price is greater than average cost b. Continue operating price is higher than average cost, its making a profit c. Continue operating as the firm is covering all the variable costs and some of the fixed costs d. Shut-down because it is cost effective to pay off the remaining fixed costs