Suppose That Pasta Is Produced Under Conditions of Perfect Competition

question 197

Multiple Choice

Suppose that pasta is produced under conditions of perfect competition and that the constant-cost industry is initially in long-run equilibrium. Now suppose there is an increase in the price of wheat, which is a key ingredient in producing pasta. Further assume that the price elasticity of demand for pasta is -1.8. In the short run, we would expect to see a:

• A) higher price and a smaller quantity of pasta.
• B) higher price and a greater quantity of pasta.
• C) lower price and a greater quantity of pasta.
• D) lower price and a smaller quantity of pasta.

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Definitions:

Ants

Social insects known for their structured colony life, ability to work together, and comprising thousands of species that inhabit almost every landmass on Earth.

Most Recent Common Ancestor

The immediate forebear from whom every organism within a group directly originates.

Eukaryotes

Organisms whose cells have a nucleus enclosed within membranes, unlike prokaryotes (Bacteria and Archaea).

Negative Frequency-Dependent Selection

An evolutionary process where rare phenotypes have a selective advantage over more common ones, maintaining genetic diversity in a population.