The responsiveness of quantity demanded of a good to changes in its price is the
A) cross elasticity of demand.
B) quantity elasticity of price.
C) income elasticity.
D) price elasticity of demand.
Answer: D
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When the price level goes up, the purchasing power of the dollar
A) varies directly with the value of the euro. B) remains constant. C) also increases. D) falls.
Three airlines account for most of the air traffic in and out of a local city. If the three airlines joined together in setting fares and air travel schedules, economists would say that they were acting as: a. monopolistic competitors, as each firm would have to differentiate its airline services from its rivals
b. perfect competitors, as each firm would sell travel services at the same fares as the other airlines. c. a cartel, as the three airlines together would attempt to coordinate policies in the local market to jointly maximize profits. d. none of the above
If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic
a. True b. False Indicate whether the statement is true or false
Specific prices are rising, and relative prices are falling.
A. Both relative prices and average prices are rising. B. Relative prices are rising, but it is not certain what is happening to average prices. C. Average prices are rising, but it is not certain what is happening to relative prices.