Micro Midterm
Instead of being employed at a printing company at a salary of $25,000 per year, Sally starts her own printing firm. Rather than renting a building that she owns to someone else for $10,000 per year, she uses it as the location for her company. Her costs for workers, materials advertising, and energy during her first year are $125,000. If the total revenue from her printing company is $155,000, her economic profit is A) -$5000 B) $5000 C) $20,000 D) $30,000 E) $120,000
A) -$5000
Which of the following best illustrates the concept of consumer surplus? A) A thirsty athlete pays $0.85 for a cold drink when she would have gladly paid $1.50 for the drink. B) An individual who is willing to accept a job at $7.50 per hour is offered $7.00 per hour. C) An individual pays the sale price of $15.00 for the same shirt that the individual refused to purchase earlier at $18.00. D) An individual finds that the price of artichokes, a food she dislikes, has been reduced by 50 percent. E) A wood-carver has a marginal cost of $5.00 for a unit of output, but sells that unit at $6.00.
A) A thirsty athlete pays $0.85 for a cold drink when she would have gladly paid $1.50 for the drink.
Nation Alpha can produce either 3 units of good X or 1 unit of good Y with one hour of labor, whereas nation Beta can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, which of the following is true? A) Beta has an absolute advantage in the production of good X B) Alpha has an absolute advantage in the production of good Y C) Beta has a comparative advantage in the production of good X D) Alpha has a comparative advantage in the production of good Y E) Alpha has both an absolute and comparative advantage in the production of good Y
A) Beta has an absolute advantage in the production of good X
The condition for allocative efficiency is violated when A) Firms are price makers (price searchers) B) Short-run profits exist in a competitive industry C) Price equals ATC D) The market demand curve is inelastic in a competitive industry E) The market demand curve is elastic in a competitive industry
A) Firms are price makers (price searchers)
Which of the following economic systems primarily relies on prices for allocating resources and goods A) Free-market B) Traditional C) Command D) Mixed E) Socialism
A) Free-market
Compared to a market economy, in a command economy there is greater A) Government involvement in the allocation of resources B) Protection of private property rights C) Reliance on prices for allocating scarce resources D) Reliance on private businesses for the allocation of resources and distribution of goods E) Consumption of consumer goods
A) Government involvement in the allocation of resources
Which of the following must be true for a firm that is a natural monopoly A) It can produce and supply its product to an entire market at a lower cost than could a number of smaller firms B) It produces at the minimum of its ATC C) It has a patent on its product D) It will not be able to maximize profits unless subsidized by the government E) It is productively efficient for the government to break up the monopoly into smaller firms
A) It can produce and supply its product to an entire market at a lower cost than could a number of smaller firms
Which of the following enables a seller to capture the entire consumer surplus in a market? A) Perfect price discrimination B) Perfect compeititon C) An excise tax on buyers D) Effective price ceiling E) Effective price floor
A) Perfect price discrimination
Monopolistically competitive firms are ineffective because they A) Produce a lower level of output at a higher average cost than do perfectly competitive firms B) Use production processes that are more capital-intensive than do perfectly competitive firms C) Face downward-sloping demand curves, ensuring that marginal revenue is greater than average revenue D) Produce at that level of output where price equals marginal cost E) Realize diseconomies of scale
A) Produce a lower level of output at a higher average cost than do perfectly competitive firms
A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run? A) Technology B) Demand for PC's C) Price of diss, which are a complement to PC's D) Price of PC's E) Consumers' incomes
A) Technology
To alleviate a financial crisis, a university increases student fees. This action will increase university revenues if the price elasticity of demand for university education is A) inelastic B) unit elastic C) elastic D) equal to the price elasticity of supply E) equal to one
A) inelastic
If a firm's long-run average total cost increases as output increases, the firm is experiencing A) Economies of scale B) Diseconomies of scale C) Increasing returns to scale D) Efficiency in plant size E) Maximum economic profit
B) Diseconomies of scale
Which of the following changes in the demand for and the supply of a good will necessarily result in an increase in both the equilibrium price and quantity of the good in a market? A) Demand increase, supply increase B) Demand increase, supply no change C) Demand no change, supply increase D) Demand decrease, supply increase E) Demand no change, supply decrease
B) Demand increase, supply no change
11. A firm produces 400 books and sells each book for $15. If the explicit cost of producing the books is $4,500 and the implicit cost is $1,000, the firm's economic profit is A) $0 B) $500 C) $1,000 D) $1,500 E) $5,000
B) $500
Following a decrease in the supply of oranges, the price of orange juice increased by 20 percent, which resulted in a 10 percent increase in the quantity of apple juice consumed. This implies that the cross elasticity of demand between orange juice and apple juice is A) 0 B) 0.5 C) 1 D) 2 E) indeterminate
B) 0.5
Which of the following MUST be true of the long run? A) It is at least one year in duration B) All factors of production are variable C) At least one factor of production is fixed D) Marginal costs are constant E) Average total costs are constant
B) All factors of production are variable
At 100 units of a firm's output, average total cost is $10, average variable cost is $8, average fixed cost is $2, and marginal cost is $12. How will each of the following change as the firm's output further increases A) Average total cost increases, Average variable cost increases, Average fixed cost increases B) Average total cost increase, Average variable cost increase, Average fixed cost decrease C) Average total cost increase, Average variable cost decrease, Average fixed cost D) Average total cost decrease, Average variable cost increase, Average fixed cost increase E) Average total cost decrease, Average variable cost decrease, Average fixed cost decrease
B) Average total cost increase, Average variable cost increase, average fixed cost decrease
Cost-benefit analysis assumes rational agents do which of the following A) Always make a decision that is best for society B) Compare additional costs and additional benefits when making a decision C) Consider only what they will lose when making a decision D) Consider only what they will gain when making a decision E) Always make the same decision
B) Compare additional costs and additional benefits when making a decision
The characteristics of oligopolistic firms that makes them different from all other types of firms is that oligopolistic firms A) Are regulated by a state agency or federal agency B) Consider each other's decisions C) Advertise their products D) Produce differentiated products E) Produce identical products
B) Consider each other's decisions
Firm XYZ produces and sells corn in a perfectly competitive market and hires its workers in a perfectly competitive labor market. Which of the following best describes the demand curve for XYZ's corn and XYZ's demand curve for labor A) Demand for XYZ's corn is horizontal, XYZ's labor demand is horizontal B) Demand for XYZ's corn is horizontal, XYZ's labor demand is downward sloping C) Demand for XYZ's corn is horizontal, XYZ's labor demand is vertical D) Demand for XYZ's corn is downward sloping, XYZ's labor demand is downward sloping E) Demand for XYZ's corn is downward sloping, XYZ's labor demand is horizontal
B) Demand for XYZ's corn is horizontal, XYZ's labor demand is downward sloping
A power company decides to use wind turbines to provide electricity instead of coal. Which basic economic question does this decision answer in a free market economy A) What goods or services will be produced B) How will goods or services be produced C) Who will consume the goods or services D) What economic system should be adopted E) Who gets to decide
B) How will goods or services be produced
A single-price monopolist's marginal revenue is A) Equal to its price B) Less than its price C) Greater than its price D) Negative when it maximizes revenues E) Zero when it maximizes profit
B) Less than its price
Which of the following about the relationship between marginal revenue (MR) and price (P) under monopolistic competition and perfect competition is correct A) Monopolistic Competition: MR > P, Perfect Competition: MR = P B) Monopolistic Competition: MR < P, Perfect Competition: MR = P C) Monopolistic Competition: MR decreases when P increases, Perfect Competition: MR increases when P decreases D) Monopolistic Competition: MR = P, Perfect Competition: MR = P E) Monopolistic Competition: MR = P<, Perfect Competition: MR < P
B) Monopolistic Competition: MR < P, Perfect Competition: MR = P
If a perfectly competitive industry were monopolized without any changes in cost conditions, the price and quantity produced would change in which of the following ways A) Price increase, quantity increase B) Price increase, quantity decrease C) Price increase, quantity may increase or decrease D) Price decrease, quantity increase E) Price decrease, quantity decrease
B) Price increase, quantity decrease
1. Which of the following best explains why individuals and societies must make choices when presented with alternatives A) People possess limited knowledge B) Resources are scarce C) People cannot agree on societal goals D) Resources are not fully employed E) People are more interested in their own well-being than in society's well-being
B) Resources are scarce
Leather and beef are jointly produced such that an increase in the production of one results in an equal increase in the production of the other. An increase in the demand for leather will most likely cause A) a decrease in the price of leather B) a decrease in the price of beef C) a decrease in the equilibrium quantity of beef sold D) an increase in the demand for beef in the short run E) an increase in the supply of leather
B) a decrease in the price of beef
If a 5 percent wage increase in a particular labor market results in a 10 percent decrease in employment, the demand for labor is A) perfectly elastic B) relatively elastic C) unit elastic D) relatively inelastic E) perfectly inelastic
B) relatively elastic
If labor is the only variable input and it costs $15 per hour and if the marginal product of labor is 3 units per hour, the short-run marginal cost of 1 unit of output is approximately A) $0.20 B) $3.00 C) $5.00 D) $15.00 E) $45.00
C) $5.00
Locotek produces toy trains and pays each worker $350 per week. Five workers can produce 40 trains per week and six workers can produce 45 trains per week. The marginal product per week of the sixth worker is A) $70 B) $350 C) 5 trains D) 7.5 trains E) 42.5 trains
C) 5 trains
Assume that the demand for a certain good is perfectly inelastic and the supply curve of the good is upward sloping. Which of the following occurs in the market for the good if the price of an input used to produce the good increases? A) A decrease in both the quantity supplied and the equilibrium amount consumed B) A decrease in the quantity supplied and an increase in the equilibrium price C) A decrease in the supply and an increase in the equilibrium price D) A decrease in both the demand and the equilibrium amount consumed E) A decrease in both the quantity demanded and the equilibrium price
C) A decrease in the supply and an increase in the equilibrium price
Oren's father tells Oren he can have one dessert after dinner. He can choose from a scoop of ice cream, a slice of apple pie, a cup of chocolate pudding, or a piece of fruit. Oren prefers chocolate pudding to a piece of fruit; he prefers apple pie to chocolate pudding; and he prefers ice cream to apple pie. If Oren chooses a scoop of ice cream, what is his opportunity cost? A) A piece of fruit B) A cup of chocolate pudding C) A slice of apple pie D) A scoop of ice cream E) A piece of fruit, a cup of pudding and a slice of apple pie
C) A slice of apple pie
Nation Aga can produce either 3 units of good X or 1 unit of good Y with one hour of labor, while nation Kaza can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, mutually beneficial exchange can take place between Aga and Kaza if A) Aga exchanges 1/2 unit of good X for 1 unit of good Y B) Aga exchanges 1 1/2 units of good X for 1 unit of good Y C) Aga exchanges 2 1/2 units of good X for 1 unit of good Y D) Kaza exchanges 1 unit of good Y for 1 unit of good X E) Kaza B exchanges 2 units of good Y for 1 unit of good X
C) Aga exchanges 2 1/2 units of good X for 1 unit of good Y
As output of a firm increases, the difference between the firm's average total cost and its average variable cost gets smaller because the firm's A) Total cost is increasing B) Marginal cost is increasing C) Average fixed cost is decreasing D) Marginal product of labor is decreasing E) Long-run average total cost is decreasing
C) Average fixed cost is decreasing
Which of the following is a source of monopoly power? A) Scarcity B) Elasticity of demand C) Barriers to entry D) Low profits E) Free markets
C) Barriers to entry
Which of the following is true if a monopolist's marginal revenue is negative at the current level of output A) Demand for its product is unit elastic B) Demand for its product is price elastic C) Demand for its product is price inelastic D) Marginal cost is equal to price E) Marginal revenue is equal to price
C) Demand for its product is price inelastic
A monopoly is different from a perfectly competitive firm in that a monopoly A) Does not have a U-shaped average total cost curve B) Has an average fixed cost curve that is perfectly horizontal C) Has a marginal revenue curve that lies below its demand curve D) Always earns economic profits E) Operates in the inelastic segment of its demand curve
C) Has a marginal revenue curve that lies below its demand curve
Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition A) In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition B) In perfect competition there are many firms, but in monopolistic competition there are only a few firms C) In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product D) In perfect competition firms maximize profit by selling the quantity where marginal revenue equals marginal cost, but in monopolistic competition firms maximize profit by selling the quantity where marginal revenue exceeds marginal costs E) In perfect competition there are few consumers, but in monopolistic competition there are many consumers
C) In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product
9. Which of the following situations best illustrates the law of demand A) As real incomes of United States citizens have decreased over the past year, the demand for housing has also decreased B) Recent decreases in the price of imported wine have led to an increase in the consumption of domestic wine C) In the past several months, as the price of compact disc players has decreased, the quantity of compact disc players sold has increased D) The increase in the price of quality health foods has increased the revenues of firms producing these goods. E) As the demand for computers has increased, the number of workers in the computer industry has increased.
C) In the past several months, as the price of compact disc players has decreased, the quantity of compact disc players sold has increased
In the short run, which of the following is true of a firm's average total cost of production? A) It is equal to marginal cost plus average variable cost B) It is equal to marginal cost plus average fixed cost C) It is equal to average fixed cost plus average variable cost D) It always increases when a firm increases production E) It is zero if the firm shuts down
C) It is equal to average fixed cost plus average variable cost
If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be A) Greater than the average variable cost B) Less than the average fixed cost C) Less than the average total cost D) Decreasing E) Negative
C) Less than the average total cost
Which of the following best describes a perfectly competitive market? A) Many small firms producing differentiated products and facing significant barriers to entry B) Many small firms producing a homogeneous product and facing significant barriers to entry C) Many small firms producing a homogeneous product and facing no significant barriers to entry D) A single large firm producing a unique product and facing significant barriers to entry E) A few large firms producing a differentiated product and facing no significant barriers to entry
C) Many small firms producing a homogeneous product and facing no significant barriers to entry
Which of the following is true for both a monopolistically competitive firm and a perfectly competitive firm in long-run equilibrium A) Marginal cost is greater than marginal revenue B) Price is greater than marginal cost C) Price is equal to average total cost D) Price is equal to marginal cost E) Marginal revenue is equal to average revenue
C) Price is equal to average total cost
Which of the following is an example of a nonrival resource A) National park camping sites that can be reserved by anyone B) Farmland that can be used to grow corn or soybeans C) Solar energy D) Fish in the ocean E) Timber in a forest
C) Solar energy
Which of the following is necessary for a firm to practice price discrimination A) The government strictly enforces antitrust laws B) The firm is a member of a cartel C) The firm can prevent resale of its goods D) The demand curve for the product is perfectly inelastic E) The demand curve for the product is perfectly elastic
C) The firm can prevent resale of its goods
Assume that a profit-maximizing, perfectly competitive firm has economic losses in the short run. If the firm continues to produce and sell its goods, then which of the following must be true? A) The firm is covering all of its fixed and variable costs of production B) The firm is covering all of its fixed costs but not all of its variable costs of production C) The firm is covering all of its variable costs but not all of its fixed costs of production D) The firm is covering all of its implicit costs but not all of its explicit costs E) The firm must have raised the price of its goods in order to minimize its losses
C) The firm is covering all of its variable costs but not all of its fixed costs of production
10. Given a production function for a firm, all of the following can be concluded from the information in the table EXCEPT: A) Diminishing marginal returns set in after the fourth unit of the variable input B) Marginal product is positive if total product is increasing C) this is a production function for a perfectly competitive firm D) A profit-maximizing firm would never voluntarily employ the eighth unit of the variable input E) Total product starts to decrease when marginal product changes from positive to negative
C) This is a production function for a perfectly competitive firm
In the short run, a decrease in production costs of a product will shift A) both the demand curve and the supply curve to the right B) the demand curve to the left and the supply curve to the right C) only the supply curve to the right D) only the supply curve to the left E) only the demand curve to the left
C) only the supply curve to the right
Shelby is an entrepreneur who has decided to open a small advertising firm. She rents office space at a cost of $25,000 per year, she has employed an assistant at a salary of $30,000 per year, and she incurs annual utility and office supply expenses of $20,000. Her best alternative is to work elsewhere and to earn a salary of $50,000 per year. How much annual revenue must her firm receive so that Shelby earns zero economic profit A) $50,000 B) $75,000 C) $100,000 D) $125,000 E) $150,000
D) $125,000
If the marginal cost of producing the first unit of some good is $20 and the marginal cost of producing the second unit is $30, the average variable cost of producing 2 units is A) $5 B) $10 C) $20 D) $25 E) $50
D) $25
The demand curve for a normal good slopes down for which of the following reasons? 1. An increase in the price of the good induces consumers to purchase substitute products. 2. An increase in the price of the goods reduces consumers' purchasing power. 3. An increase in the price of the good increases consumers' utility from consuming that good. A) 1 only B) 2 only C) 3 only D) 1 and 2 only E) 1 and 3 only
D) 1 and 2 only
Which of the following is an example of a scarce factor of production A) Money B) Food C) Flour D) Airplanes E) Established knowledge
D) Airplanes
Which of the following is always true of the relationship between average and marginal costs? A) Average total costs are increasing when marginal costs are increasing B) Marginal costs are increasing when average variable costs are higher than marginal costs C) Average variable costs are increasing when marginal costs are increasing D) Average variable costs are increasing when marginal costs are higher than average variable costs E) Average total costs are constant when marginal costs are constant
D) Average variable costs are increasing when marginal costs are higher than average variable costs
Monopolies are inefficient compared to perfectly competitive firms because monopolies A) Produce output with average total cost exceeding average revenue B) Produce more output than is social desirable C) Charge a price less than marginal revenue D) Charge a price greater than marginal cost E) Charge a price less than average total cost
D) Charge a price greater than marginal cost
Which of the following will enable an economy to reach a point outside the PPC A) Reallocating currently available resources from apple production to production of oranges B) Reallocating currently available resources from orange production to production of apples C) Fully allocating currently available and unemployed resources efficiently D) Creating or discovering new resources E) Becoming a mixed economy
D) Creating or discovering new resources
Which of the following statements is true for both a monopolistically competitive firm and a perfectly competitive firm in long-run profit-maximizing equilibrium A) Economic profits equal zero, and price equals marginal cost B) Economic profits equal zero, and price equals marginal revenue C) Marginal revenue equals marginal cost, and profits are positive D) Economic profits equal zero, and marginal revenue equals marginal cost E) Economic profits equal zero, and price exceeds marginal cost
D) Economic profits equal zero, and marginal revenue equals marginal cost
Suppose that price in a perfectly competitive industry decreases and it is now below minimum average total cost but remains above minimum average variable cost. Which of the following will occur in the short run? A) New firms will enter the industry B) Firms will increase output so that marginal revenue equals the new price C) Firms will produce the output at which average total cost is at a minimum D) Firms will produce the output at which marginal cost equals the new price E) Firms will not produce at all, since they will be unable to cover all their costs
D) Firms will produce the output at which marginal cost equals the new price
Because of conflict and political instability in Country Y, millions of its citizens emigrate to Country X. Which of the following best explains what will happen to Country X's production possibilities curve A) Its PPC will not change, but consumption of goods will decrease B) It will move to a point inside its PPC, indicating slower growth C) It will move to a point on its PPC at which it produces only consumer goods D) Its PPC will shift outward over time E) Its PPC will shift inward over time
D) Its PPC will shift outward over time
Assume that labor is the only variable input. If a firm's short-run marginal cost is increasing as output rises, which of the following must be true? A) Average product of labor is constant B) Average product of labor is increasing C) Marginal product of labor is greater than average product of labor D) Marginal product of labor is decreasing E) Total product of labor is decreasing
D) Marginal product of labor is decreasing
Which of the following is true of a monopolistically competitive firm in long-run equilibrium A) Price if greater than marginal cost, and marginal revenue is equal to average total cost B) Price is greater than marginal revenue, and marginal cost is equal to average total cost C) Price is greater than marginal revenue, and marginal cost is greater than average total cost D) Marginal revenue is equal to marginal cost, and price is equal to average total cost E) Marginal revenue is greater than marginal cost, and price is equal to average total cost
D) Marginal revenue is equal to marginal cost, and price is equal to average total cost
If Nation X produces coffee at a higher opportunity cost than Nation Y, which of the following is true? A) Nation X must have an absolute advantage in producing coffee B) Nation X must have a comparative advantage in producing coffee C) Nation Y must have an absolute advantage in producing coffee D) Nation Y must have a comparative advantage in producing coffee E) There is insufficient information to determine both absolute and comparative advantage
D) Nation Y must have a comparative advantage in producing coffee
Suppose that Habib has a weekly fixed budget and spends it all on music downloads and snacks. At his current combination of consumption, the marginal utility of the last dollar spent on music downloads is greater than the marginal utility of the last dollar spent on snacks. Has Habib maximized his utility A) Yes, because he has purchased the maximum possible with his limited budget B) Yes, because he has purchased the two goods in proportion so that he can get the maximum utility from each C) Yes, because changing his current consumption combination will reduce his total utility D) No, because he can increase his total utility by purchasing more music downloads and fewer snacks E) No, because he can increase his total utility by purchasing fewer music downloads and more snacks
D) No, because he can increase his total utility by purchasing more music downloads and fewer snacks
12. Interdependence among firms is a characteristic primarily associated with A) Labor markets B) Perfect competition C) Monopsony D) Oligopoly E) Monopoly
D) Oligopoly
A monopolist produces two unrelated goods, X and Y. The demand for X is currently price elastic and the demand for Y is currently price inelastic. To increase its total revenue, the firm should change the price of X and Y in which of the following ways? A) Price of X increase, Price of Y no change B) Price of X increase, Price of Y decrease C) Price of X increase, Price of Y increase D) Price of X decrease, Price of Y increase E) Price of X decrease, Price of Y decrease
D) Price of X decrease, Price of Y increase
Which of the following is true for a monopoly but NOT for a perfectly competitive firm A) The firm maximizes profit by equating marginal cost to marginal revenue B) The firm's demand curve is the same as its average revenue curve C) At the profit-maximizing output level, price is less than marginal revenue D) The firm faces a downward-sloping demand curve E) The firm earns zero economic profit in the long run
D) The firm faces a downward-sloping demand curve
The long-run average cost curve will be sloping downward if a firm experiences A) Diminishing marginal returns B) Decreasing returns to scale C) Constant returns to scale D) Diseconomies of scale E) Economies of scale
E) Economies of scale
If total revenue is increasing as output increases, marginal revenue is always A) Equal to average revenue B) Less than average revenue C) Increasing D) Decreasing E) Greater than zero
E) Greater than zero
Which of the following is always true of a monopoly that is producing a level of output such that marginal revenue is negative A) It is experiencing economies of scale in production B) It is maximizing total revenue C) It is producing where demand is price elastic D) It could lower price to increase profits E) It could decrease output to increase profits
E) It could decrease output to increase profits
Which of the following is true about a firm's average variable cost? A) It will rise if marginal cost is less than average variable cost B) It will never equal the firm's marginal cost C) It will decline when the firm's marginal product declines D) It will be negative if marginal revenue declines E) It will equal average total cost when fixed costs are zero
E) It will equal average total cost when fixed costs are zero
Assume a consumer finds that his total expenditure on compact discs stays the same after the price of compact discs declines. Which of the following is true for this price change? A) Compact discs are inferior goods to this consumer. B) The consumer's demand for compact discs increased in response to the price change. C) The consumer's demand for compact discs is perfectly price elastic. D) The consumer's demand for compact discs is perfectly price inelastic. E) The consumer's demand for compact discs is unit price elastic.
E) The consumer's demand for compact discs is unit price elastic.
Which of the following must be true if the revenues of wheat farmers increase when the price of wheat increase A) The supply of wheat is price elastic. B) The supply of wheat is income elastic. C) The supply of wheat is income inelastic. D) The demand for wheat is price elastic. E) The demand for wheat is price inelastic.
E) The demand for wheat is price inelastic.
The price of an airline ticket is typically lower if a traveler buys the ticket several weeks before the flight's departure date rather than on the day of departure. This pricing strategy is based on the assumption that A) Travelers are not aware of how airline prices change across time B) Travelers do not have alternative modes of transportation C) Travelers will pay any price to travel as the departure date approaches D) The marginal cost of the last few seats on an airplane is higher than that for the first few seats E) Travelers' demand becomes less elastic as the departure date approaches
E) Travelers' demand becomes less elastic as the departure date approaches
