Answer the following questions true (T) or false (F)
1. The elasticity of supply is equal to the percent change in price for a given percent change in quantity.
2. The market supply curve under conditions of perfect competition is typically perfectly elastic.
3. An increase in supply will increase the quantity demanded.
1. FALSE
2. FALSE
3. TRUE
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The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2?
A. a decrease in the price of wheat B. a subsidy for wheat production C. an increase in the price of wheat D. a tax on wheat production
In real-world markets
a. economic efficiency is rare because making voluntary transactions is difficult b. economic efficiency is rare because Pareto improvements are difficult to make c. economic efficiency is best thought of as a continuum d. perfect competition is an impediment to economic efficiency e. every possible Pareto improvement is exploited