We assume that firms, when they are deciding the best rate of output at which to produce
A. want to minimize costs.
B. try to get the highest price possible.
C. want to maximize profits.
D. want to maximize sales.
Answer: C
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If the elasticity of demand for the latest American Idol album is 1.4, this means
A. few substitutes for the American Idol album exist. B. a 10% decrease in the price leads to a 140% increase in quantity demanded. C. a 5% increase in the price leads to a 7% decrease in quantity demanded. D. a 1% increase in the price leads to a 14% decrease in quantity demanded.
Social Security is paid for by an earmarked payroll tax
a. True b. False
A monopolist faces a horizontal demand schedule
a. True b. False Indicate whether the statement is true or false
The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
Correct! +4.5% -4.5% +15% +45%