Supply price elasticity measures sellers' sensitivity to changes in price. When price changes have a large impact on supply, we say that supply is price elastic, with small price increases supply will increase considerably. We say that an offer is perfectly elastic when from a certain price level, suppliers have bid as much as possible. In the short term, however, firms bump into structural factors to deliberately increase their supply. For example, a factory has a short-run maximum production limitation. In the short term, the factory may grow its plant and buy more machines, but in the short term from one point the supply is more rigid.
There are, however, some exceptions. In the case of natural monopolies, such as water supply, the increase in price may increase supply indefinitely. This is a case where, in the short run, price elastic supply can be infinitely elastic. Thus, rising prices can increase the amount of water supplied as much as demanded by consumers. This is because the marginal cost of supplying more water is low for the firm.
Note: marginal cost is the cost of manufacturing one more unit of the product supplied. In the case of water, the marginal cost of providing 1 unit of water measurement is very low.
Answer:
B. those who lose from free trade are better organized than those who gain.
Explanation:
There is a bias in the political process against free trade because <u>those who lose from free trade are better organized than those who gain</u>.
Free trades are the business agreement between two or more countries to import or exports among these countries does not have tax duties to follow, which boast their relationship and economy of countries as people can get quality goods at very low cost from other nation, however, many domestic organized sectors the affected by the free trade as they lose customer and revenue. Therefore, free trade has a negative effect on the local producer, which causes bias in the political process against free trade.
Answer:
a. You would expect the yields to rise due to increased default risk.
c. You would expect the yields to rise to compensate investors for the loss of the tax-exempt status.
Explanation:
The foreign government is threatened with bankruptcy which means that the government might be unable to pay their bond obligations. This means that the risk of default has now increased and so yields will rise as a result of this.
Tax exempt bonds like Municipal bonds generally have lower yields because of their tax savings. If the Government was to impose taxes on previously tax exempt bonds, people would be getting less and so would have to be compensated for this loss by increased yields.
