In the case of a linear demand curve, demand becomes more price elastic as price increases
Indicate whether the statement is true or false
True . For a demand curve of the form Q = a - bp, elasticity can be written as
-b[p/(a - bp)]. As p increases, the term in square brackets increases, making the elasticity increase.
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A fair coin is flipped. If it lands heads the person receives $1.00. If it lands tails, the person receives $11.00. If the person is willing to pay $6.00 to take this gamble, they must be
a. risk-averse. b. risk-neutral. c. risk-preferring. d. either risk-neutral or risk-preferring (not risk-averse).
The number of presidentially appointed members who sit on the Federal Reserve Board of Governors is:
A. none. B. seven. C. nine. D. twelve.
The economic inefficiency of monopolistic competition means that:
A. industries spend money on advertising and sales promotion. B. firms do not maximize profits at the MC equals MR output. C. firms produce at an output short of, and charge a price greater than, minimum average total cost. D. industries tend to evolve into oligopolies rather than become more competitive.
The current yield of a bond:
A. is another term for the yield to maturity. B. is the difference between its future value and its present value. C. equals zero for a zero-coupon bond since these bonds have no coupon payments. D. is another term for the coupon rate.