According to the theory of demand,
a. a change in the consumer’s income or wealth changes the entire demand relationship
b. the consumer’s willingness to pay is also called the demand price
c. demand price measures the marginal benefit (MB) of consuming another unit of the good
d. a change in product price changes quantity demanded
e. all of the above
e. all of the above
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A rent ceiling below the equilibrium rent will create
A) a more efficient allocation of housing. B) a larger number of apartments rented. C) no change in the number of apartments rented. D) increased search time and black markets.
Answer the following statements true (T) or false (F)
1. The demand for necessities and goods that require a small expenditure tends to be price inelastic. 2. If total revenue decreases when a price is decreased, the demand for the commodity is elastic. 3. If the coefficient of elasticity for a commodity is 1.5 and the price of that commodity is raised, total revenue will decrease. 4. The slope of a demand curve is a measure of elasticity. 5. The demand for a fur coat tends to be more price elastic than the demand for automobile tires.
A monopolist in the radio industry has two radio-making plants. The marginal cost of radio production by Plant A is $4Q (where Q is the number of radios produced) and the marginal cost of radio production by Plant B is always $16 . If the demand curve for radios is downward sloping, the monopolist will
a. never produce radios at Plant A. b. always produce four times as many radios at Plant B as at A. c. never produce more than four radios at Plant A. d. produce radios at Plant A only as a last resort.
In an open economy, an increase in capital inflows ________ the equilibrium domestic real interest rate and ________ the quantity of domestic investment.
A. increases; decreases B. increases; increases C. decreases; decreases D. decreases; increases