The demand curve for hotel rooms is Q = 1100 - 2P. If the price of a hotel room is $50, then the price elasticity of demand for hotel rooms is
a. -0.1 c. -10
b. -1.0 d. zero
a. -0.1
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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
During recent Global Economic Crises, U.S. household liabilities have
A) increased B) decreased C) remained the same D) quadrupled
If the government wanted to curb consumption of alcohol by taxing alcohol without hurting consumer's welfare it would
A. need to know the income effect but not the substitution effect of a tax hike. B. tax until the income effect of the price increase, which would be refunded, is exactly equal to the revenue gained from the tax. C. need to know the substitution effect but not the income effect of a tax hike. D. raise the tax on alcohol until demand for alcohol became elastic.
When government increases a fixed tax, consumption schedule
A. shifts downward in a parallel manner. B. shifts upward in a parallel manner. C. becomes horizontal. D. becomes vertical.