Which of the Following Is NOT an Assumption of the Classical

question 345

Multiple Choice

Which of the following is NOT an assumption of the classical model?

• A) Buyers and sellers react to changes in relative prices.
• B) Households want to maximize economic well being.
• C) No single buyer or seller of a commodity can affect its price.
• D) Wages and prices will move freely in the upward direction but not the downward direction.

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Definitions:

Advertising Elasticity of Demand

The responsiveness of the quantity demanded of a good to a change in the amount of advertising for that good.

Marginal Cost of Production

The change in total production costs that comes from making or producing one additional item.

Advertising Elasticity of Demand

Measures the responsiveness of the quantity demanded of a good or service to a change in the level of advertising for that good or service.

Rule of Thumb

A general principle that provides practical instructions for accomplishing or approaching a certain task.