If the Price of Steel Increases Drastically, the Quantity of Steel

question 6

Multiple Choice

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because

• A)buyers of steel are more sensitive to a price change if they have more time to adjust to the price change.
• B)buyers of steel are less sensitive to a price change if they have more time to adjust to the price change.
• C)sales revenue in the building industry will fall sharply.
• D)profits will fall by a greater amount in the long run than in the short run.

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Definitions:

Elastic

A characteristic of a good or service that describes its responsiveness to changes in price; highly sensitive to price changes.

Rents

Payments made to the owner of a property (such as land, buildings, or apartments) for the use of that property.

Sub-prime Lending

The practice of making loans to borrowers who are considered to be at higher risk of default, typically due to having a poor credit history.

Payday Lenders

Financial institutions that provide high-interest, short-term loans to individuals typically due on the borrower's next payday.