For computers and other business equipment, small changes in business earnings tend to generate relatively large short-run changes in the demand for this equipment, and the long-run income response tends to be smaller. Industries that face demand behavior of this type are known as:
A) natural monopolies.
B) cartels.
C) cyclical industries.
D) constant-cost industries.

Question

Quizplus · Accepted Answer

The behavior described in the question is typical of cyclical industries, as changes in business earnings (which can be affected by economic cycles) have a large impact on short-run demand for equipment, but the long-run income response tends to be smaller as businesses adjust and adapt to economic changes over time. Natural monopolies, cartels, and constant-cost industries do not exhibit this type of demand behavior.

For Computers and Other Business Equipment, Small Changes in Business