Suppose the demand function is given by Qxd = 8Px-0.5 Py0.25 M0.12 H. Then the demand for good x is:
A. unitary.
B. perfectly elastic.
C. inelastic.
D. elastic.
Answer: C
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Joe's increase in wages has been identical to the increase in the price level. Joe thinks that he is better off and has increased his expenditures. Joe's behavior is consistent with
A) the classical model. B) Say's law. C) money illusion. D) a vertical aggregate supply curve.
What is a cap-and-trade policy? (Be certain to mention marketable permits.) Suppose there are two firms in an area, each emitting tons of sulfur
The government decides on a target level of 200 tons of sulfur, and gives each firm a permit to emit 100 tons of sulfur. Suppose Firm A is very efficient and can reduce pollution by 100 tons with an abatement cost of $500. Firm B has an older plant, so it will cost Firm B $1,000 to reduce emissions by 100 tons. What will occur with marketable permits?
In the short run a firm should shut down if it cannot
A) make normal profits. B) make economic profits. C) cover its variable costs. D) cover its fixed costs.
According to convergence theory, countries that start out poor should initially grow:
A. faster than ones that start out rich, but will eventually slow to the same growth rate. B. slower than ones that start out rich, but will eventually grow to the same growth rate. C. faster than ones that start out rich, and will eventually surpass their level of income. D. slower than ones that start out rich, and therefore will never reach a similar growth rate.