Statement 1: The elasticity of demand for a necessity good will be more elastic

Question

Statement 1: The elasticity of demand for a necessity good will be more elastic that that of a luxury item. Statement 2: Elasticity of demand is ALWAYS a negative number.
A) Statement 1 is true; statement 2 is false.
B) Statement 1 is false; statement 2 is true.
C) Statements 1 and 2 are both true.
D) Statements 1 and 2 are both false.

A or C?

If a shortage of a good exists, then this is an indication that the price of the good is BELOW the equilibrium price, Pe.
A) True
B) False

True?

The law of supply tells us how sensitive consumers are to changes in the price of a good in terms of the quantity of output they are willing and able to purchase.
A) True
B) False

False?

Firms are more willing to pay for general training, and less willing to pay for specific training.

A) True
B) False

False?

Theoretically, the sum of the current account and the capital account should always be equal to zero.
A) True
B) False

True?

The elasticity of supply will tend to be more elastic in the short run as compared to the long run.
A) True
B) False

True?

Moral hazard and adverse selection are examples of imperfect information in markets.
A) True
B) False

True?

The opportunity cost of an action or decision ONLY involves the out-of-pocket dollar expenses involved in that action or decision.
A) True
B) False

True?

Social surplus is maximized only in perfectly competitive markets.

A) True
B) False

False?

Explanation / Answer

D) Statements 1 and 2 are both false.

The giffen goods have positive elasticity

A) True

B) False

B) False

A) True

B) False

A) True

B) False

B) False

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