Ingrid's Ice cream Parlor has an own price elasticity of 5 . It has an approximate share of 10% in the market for ice cream. What is the aggregate own price elasticity of the market?
a. 0.1%
b. 0.5%
c. 0.7%
d. 1%
b
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In order to protect against foreign exchange risk, firms can use
A) the spot market for foreign exchange. B) interest rate arbitrage. C) purchasing power parity. D) the forward market for foreign exchange. E) the J-curve.
According to a survey by the U.S. Bureau of Labor Statistics, which of the following statements about annual U.S. household consumer expenditures is false?
A) The income elasticity of demand for entertainment is positive. B) The income elasticity of demand for owner-occupied housing is positive. C) The income elasticity of demand for rental housing is positive. D) The income elasticity of demand for health care is positive. E) Average family expenditures increase with income.
Which of the following statements about the substitution effect of a price change is true?
a. It is caused by a change in relative prices. b. It affects the consumer's ability, rather than willingness, to purchase a good. c. It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases. d. It is usually equal to the income effect. e. It may cause the consumer to buy less of the good when its price falls.
Excludability matters because it:
A. allows owners to set an enforceable price on a good. B. allows consumers to control the price of a good. C. creates a perceived scarcity that allows the seller to keep the price artificially high. D. creates a perceived scarcity that causes buyers to have an inelastic demand for the good.