Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands
a. True
b. False
Indicate whether the statement is true or false
True
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Perfectly inelastic demand means that consumers
A) are willing to buy any quantity of the good at a given price, but none at higher prices. B) decrease their consumption as price rises. C) increase their consumption as price rises. D) will buy a certain quantity, regardless of price. E) will buy a huge, almost infinite amount more, if the price falls just a little.
In the two-period model, r denotes
A) real income. B) the nominal interest rate. C) the real interest rate. D) current taxes.
An inflationary gap is the amount by which
A) total planned production exceeds total planned real expenditures in the long run. B) the short-run equilibrium level of nominal GDP is above the short-run level of real GDP. C) the short-run equilibrium level of nominal GDP is below the short-run level of real GDP. D) the short-run equilibrium level of real GDP is above the full-employment level of real GDP.
A firm that attempts to pass along the cost of higher union wages to consumers in the form of higher prices will be more successful if the price elasticity of demand for its product is
A. Elastic. B. Unitary. C. Inelastic. D. Perfectly elastic.