Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s).Recall the Application. Suppose the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.55. If supply increases by 20 percent, the equilibrium price will decrease by:
A. 27 percent.
B. 57 percent.
C. 175 percent.
D. 375 percent.
Answer: A
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Because the price level shares a negative relationship with aggregate expenditures on GDP, the aggregate demand curve is:
A. downward sloping. B. upward sloping. C. perfectly elastic. D. perfectly inelastic.
The text uses many examples to illustrate ideas. In the analysis of mergers, it mentioned that R. J. Reynolds merged with all of the following firms except
a. Nabisco b. Coca-Cola c. Kraft d. Del Monte e. Hawaiian Punch
The national debt refers to the total amount that the government:
a. has borrowed over time. b. borrowed last year. c. plans to spend this fiscal year. d. has spent over time.
To derive the law of demand, we assume that
A. marginal utility is constant. B. prices are constant. C. tastes are constant. D. real prices are constant.