Many city governments grant operating licenses to a specific cable television company. this license to be the only cable provider is called a(n)
a) trusts
b) monopoly
c) pure competition.
d) monopolistic competition

a modest price increase for a monthly cell phone package has had little or no effect on demand. this most likely indicates that demand for the product is
a) complementary.
b) elastic.
c) inelastic.
d) variable.

in a market economy, a high price is a signal for
a) producers to supply less and consumers to buy less.
b) producers to supply less and consumers to buy more.
c) producers to supply more and consumers to buy less.
d) producers to supply more and consumers to buy more

1. = A. monopoly

In regard to some city infrastructure services, it is seen as beneficial to have a single supplier. For instance, water and sewer systems tend to be operated as a single entity under city or county supervision. Cable television service, however, is an area where having business competition likely would be good for a city's residents. Licensing only one cable provider gives a monopoly to that company. It may happen, though, in small towns where the municipal government needs to attract a company to do business there.

2. = C. inelastic

As defined by Investopedia, demand elasticity "refers to how sensitive the demand for a good is to changes in other economic variables, such as prices and consumer income ." Demand is said to be elastic when even small changes in price will affect consumers' buying habits for that product. If the price goes down a little, shoppers will stock up at the lower price. If the price goes up a little, shoppers will hold off on buying and wait for the price to drop. This can happen with food products, where shoppers may simply change to different menu items because a particular food item's price has spiked for a time. Inelastic demand means that changes in price will have less effect on consumers' buying habits. They still need and purchase the product or service in the same amounts even if prices go up slightly. This happens with gasoline, for instance. The price at the pump may be 10 cents higher this week, but you still fill your gas tank. Or cell phone service remains a consumer commitment even though prices fluctuate.

3. = C. producers to supply more and consumers to buy less.

Think of a high price as saying to producers, "Go, go, go!" There is obvious demand for the product that has pushed the price high--so the more you can make and sell, the more you as a supplier will profit. At the same time, the high price is saying to consumers, "Whoa, whoa, whoa! Slow down!" High prices will tell consumers to hold off on purchasing something and assess whether they really need it or can afford it. Even if the product is needed, consumers may wait, in hopes that prices will come down before long, or buy less of the product than they would have if prices were lower.