Suppose that 75 percent of a cigarette tax is borne by consumers. If the supply elasticity is 1, the demand elasticity is equal to:
A. 1/2.
B. 1.
C. 1/3.
D. 1/4.
Answer: C
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Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. What happens if Max's mother gives him 10 pounds of burger?
A) Max would have preferred receiving the dollar value of the burger. B) Max is indifferent between this gift and the dollar value of the burger. C) Max prefers this gift to the dollar value of the burger. D) None of the above.
Changes in nominal GDP only reflect changes in production while changes in real GDP include changes in both production and prices
Indicate whether the statement is true or false
If Sam receives a pay cut and the income effect outweighs the price effect on his labor supply decision, he will:
A. work the same hours no matter what. B. quit and not work at all. C. work less hours. D. work more hours.
Central planning is a key characteristic of which economic system?
A) free market B) price system C) command and control D) mixed economic system