When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is ________ and total revenue from coffee sales will ________.
A. inelastic; decrease
B. elastic; decrease
C. inelastic; increase
D. elastic; increase
Answer: B
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A CPI that equals 1.34 in 2008 (when 2000 is the base year) means that:
A. the average level of prices is 34 percent higher in 2008 than in the base year. B. prices in 2008 are 34 percent higher than in 2007. C. the CPI equals $1.34 in 2008. D. the inflation rate in 2008 is 134 percent.
Nominal interest rates are higher than real interest rates as long as
A) expected inflation is positive. B) the government taxes interest income. C) inflation is expected to decline in the future. D) long-term interest rates are higher than short-term interest rates.
When Country X has high economic growth, this country has
A) a high level of real Gross Domestic Product (GDP). B) a high level of per capita real Gross Domestic Product (GDP). C) a large increase in per capita real Gross Domestic Product (GDP). D) a large increase in personal income.
Which of the following is true with regards to a long-run cost function?
a. The shape of the firm's long-run cost function is important in decisions to expand the scale of operations b. The long-run average cost curve is U-shaped c. The long-run average cost curve is flatter than the short-run average cost curve. d. The curve consists of the lower boundary of all the short-run cost curves e. All of the above