Which of the following factors will make the demand for a product relatively elastic?
A. There are few substitutes
B. The time interval considered is long
C. The good is considered a necessity
D. Purchases of the good require a small portion of consumers' budgets
B. The time interval considered is long
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Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed. As a consequence, Cuba:
A. Experienced an outward shift of its production possibilities curve B. Experienced an inward shift of its production possibilities curve C. Moved from one point to another along its existing production possibilities curve D. Went to a point inside its production possibilities curve
Salvador grows orchids to sell to local florists. When Salvador began raising his current crop of 1,000 orchids, he could sell them for $20 per plant, and he incurred shipping costs of $3 per plant. His cost of raising orchids is $8 per plant
When his crop was ready to ship, florists were only paying $9 per plant. Use marginal analysis to determine Salvador's best course of action given the drop in the price of orchids.