The supply of a product which is made from a resource with low resource mobility is generally: A. elastic in both the short and long run. B. equally inelastic in the short and long run. C. elastic in the short run and inelastic in the long run. D. inelastic in the short run but more elastic in the long run. Which of the following is least likely to lead to a shift in the demand curve for a product? A change in: A. price of the product. B. consumer preferences. C. the price of a substitute product. D. distribution of consumer incomes. Advertising to promote a certain brand name: A. does not affect product pricing since consumers are under no obligation to buy goods that are heavily advertised. B. is never of benefit to consumers since the cost of advertising will mean that consumers are overpaying for the product. C. does not affect product pricing since producers must bear the cost of advertising and cannot pass the cost on to consumers. D. can be beneficial to consumers since once a brand name has value the owners of the brand name will be careful to protect the reputation of their product.
D A A ???
- D? 2. A 3. A
I am anxious to know the answers to these. How about some solutions?
Answers are D, A, D Low resource mobility will make the supply relatively inelastic in the short run since the resource cannot be easily transferred to another use. Generally long-run elasticity is more elastic than short-run elasticity, as suppliers have time to adjust to the change in prices. Price will lead to a change in the quantity demanded along the same demand curve. The other factors will lead to a shift in the entire demand curve. Advertising can provide consumers with information about the product so it does have some benefit to consumers, but the cost of advertising will often be passed on to consumers through higher prices. It is true, however, that consumers are under no obligation to pay higher prices since they have the option to buy a cheaper product that is not heavily advertised. Consumers will benefit in that a firm that has spent heavily to establish a brand name will be anxious to maintain the value of the brand name, and therefore provide an attractive product to the consumer.