Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the price elasticity of demand for Starbucks coffee is:
A. 0.40.
B. 0.80.
C. 1.25.
D. 2.50.
Answer: C
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In the above figure, the long-run average cost curve exhibits diseconomies of scale
A) between 5 and 10 units per hour. B) between 10 and 20 units per hour. C) between 20 and 25 units per hour. D) along the entire curve.
A bank has $10,000 in excess reserves and the required reserve ratio is 20 percent. This means the bank could have __________ in checkable deposit liabilities and __________ in total reserves
A) $80,000, $10,000 B) $100,000, $20,000 C) $50,000, $25,000 D) $100,000, $30,000
A market equilibrium might not maximize total economic surplus because:
A. in a market equilibrium individuals do not exploit all opportunities for individual gain. B. in a market equilibrium individuals do not act rationally. C. efficiency is not an important social goal. D. sometimes goods entail costs and benefits that do not fall on buyers and sellers.
Student loans are
A. rarely discharged (forgiven) in bankruptcy. B. collected first in bankruptcy proceedings. C. treated no differently than other obligations in bankruptcy. D. usually discharged (forgiven) in bankruptcy.