When the price of toothpaste increases by 15 percent, the quantity of toothpaste demanded falls by 30 percent. Calculate the price elasticity of demand. Is the demand for toothpaste elastic, inelastic, or unit elastic?
What will be an ideal response?
Price elasticity of demand = [-30/15] = -2 . Since the absolute value of the price elasticity is greater than one, the demand for toothpaste is elastic.
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If the government decreases its purchases of goods and services by $12,000 and the MPS is 0.5, GDP and income will eventually decrease by
A) $2,400. B) $6,000. C) $24,000. D) $60,000.
The increased labor force participation rates for women since the 1970s led most directly to ________
A) an increase in labor demand B) a decrease in labor demand C) a decrease in labor supply D) an increase in labor supply
Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands. Her weekly total revenue equals $3,500 . Her weekly total cost of running the stand equals $3,500, consisting of $2,500 of variable costs and $1,000 of fixed costs. An economist would likely advise Darlene to: a. shut down as quickly as possible because the stand is generating losses
b. keep the stand open because it is generating a normal profit. c. keep the stand open for a while longer because she is covering all of her variable costs and some of her fixed costs. d. keep the stand open for a while longer because she is covering all of her fixed costs and some of her variable costs.
Incentives matter
A) to all human beings regardless of environment. B) only in a free market system. C) only in the private sector. D) only when people are greedy and selfish.