Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adjust his spending
elsewhere. These examples illustrate the importance of
a. changes in total revenue in determining the price elasticity of demand.
b. a necessity versus a luxury in determining the price elasticity of demand.
c. the definition of a market in determining the price elasticity of demand.
d. the time horizon in determining the price elasticity of demand.
c
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If an environmental group wanted to prevent the habitat destruction of the Wyoming pocket gopher, the Coase theorem would direct the group to
A) try to get laws enacted to protect the species. B) bargain in order to obtain the property rights of the gopher habitat. C) physically block any efforts to destroy the habitat. D) protest the destruction while gaining media attention for their cause.
A college must decide if it wants to offer more adult literacy classes. This decision involves answering the economic question of "what to produce."
Indicate whether the statement is true or false