Suppose the own price elasticity of demand for good X is ?0.5, and the price of good X increases by 10 percent. What would you expect to happen to the total expenditures on good X?
A. Increase
B. Remain unchanged
C. Decrease
D. Neither increase, decrease, nor remain unchanged
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
A point inside the production possibilities frontier is ________ while a point outside the frontier is ________.
A. below the maximum possible; the maximum possible B. unattainable; attainable C. attainable; unattainable D. the maximum possible; below the maximum possible
Scarcity requires that we:
A. make sure we only want things that we are capable of consuming and producing. B. change our fiscal policy until the situation of scarcity is eliminated. C. make decisions in order to arrange our resources rationally. D. adopt economic policies that will lead to unlimited resources.
Which of the following is not a limitation a person faces when shopping for clothes?
a. The amount of time available to shop b. The person's budget c. The various styles that are available d. The selection of stores e. The freedom to make rational choices