What is the price elasticity of demand? In terms of percentage changes, what is its formula?
What will be an ideal response?
The price elasticity of demand is a measure of the responsiveness of quantity demanded to a change in price. The formula for the price elasticity of demand is the absolute value of the percentage change in quantity demanded divided by the percentage change in price.
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Huge increases in government spending and record low levels of unemployment during the Vietnam War era in the late 1960s led policy makers to fear that
A) the economy was slipping into a recession, which would increase unemployment. B) the economy was growing too fast, which would increase unemployment. C) the economy was slipping into a recession, which would increase inflation. D) the economy was growing too fast, which would increase inflation.
Which of the following conditions would distinguish a competitive firm from a monopolist?
a. The existence of a demand curve for the firm. b. The slope of the demand curve facing the firm. c. The rule of profit maximization, i.e., produce where MR = MC. d. The relationship between marginal revenue and total revenue. e. The existence of diseconomies of scale.
Which of the following statement(s) most likely describes the outcome of a change in price?
a. A change in the price of a good never causes the demand curve for that good to shift. b. A change in the price of a good never causes the demand or supply curve for that good to shift. c. A change in the price of a good never causes the supply curve for that good to shift. d. A change in the price of a good causes the demand and supply curves for that good to shift.
The demand curve of the monopoly firm is always the
A. average revenue curve. B. marginal revenue curve. C. total revenue curve. D. marginal cost curve above average variable cost.