-Refer to the Figures Above to Answer This Question

question 39

Multiple Choice

-Refer to the figures above to answer this question. Figure ________ represents the market for ________ because its supply is ________.

• A) B; land; elastic as predicted by the Hotelling Principle
• B) A; land; perfectly inelastic because the quantity of land is fixed
• C) B; a nonrenewable resource; demand changes as the economy changes
• D) A; a nonrenewable resource; inelastic because reserves can always be discovered
• E) B; land; inelastic given only a limited amount of land is available

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Definitions:

Substitution Effect

The economic principle that as prices rise, consumers will replace more expensive items with less costly alternatives.

Income Effect

The impact that changes in either personal or economic income have on how much of a good or service is sought after.

Quantity of Labor

The total hours of work or number of workers employed by a firm or within an economy, which can influence production output levels.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive items.