Say a study reveals that price elasticity of demand for teenage smoking was -0.5. If the government imposed a tax on cigarettes the total expenditure teenagers spend on buying cigarettes would
A. decrease.
B. stay the same.
C. increase.
D. we can't answer with the information given.
Answer: C
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Which of the following is likely to be an unreported economic activity?
A) the brokerage fees paid to a broker at Merrill Lynch B) the purchase of shares of stock in Walgreen's Pharmacy C) a $250,000 bonus paid to the CEO of a company D) tips paid to a taxi driver E) the minimum wage paid to a teenager working at a McDonald's
If half of all unemployed individuals suddenly gave up looking for work, the unemployment rate would ________ and the labor force participation rate would ________
A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase E) There is not enough information to answer this question.
As the economy nears the end of an expansion, which of the following do we typically see?
A) falling wages relative to output prices B) rising interest rates C) rising firm profits D) rising levels of firm investment
The classical model indicates that at the equilibrium interest rate, saving is
A. greater than investment. B. less than investment. C. unnecessary for investment. D. equal to investment.