Suppose that the price elasticity of demand for snow shovels is –1.2 . What would have to happen to the price of a snow shovel for the quantity demanded to fall from 2,000 to 1,800? Use the midpoint formula in your calculations
What will be an ideal response?
percentage change in quantity demanded = [1,800 – 2,000]/[1,900] = -200/1,900
= -10.5.
[-10.5]/[percentage change in price] = -1.2
Therefore, the price of snow shovels must rise by 8.75 percent.
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With the exception of the U.S., the majority of the world's trading partners utilized the gold standard
Indicate whether the statement is true or false
The Bretton Woods agreements
a. established a system of fixed exchange rates based on the free convertibility of the U.S. dollar into gold. b. established a system of fixed exchange rates based on the gold standard. c. permitted countries with a balance of payments deficit to make regular devaluations of their currencies. d. established GATT to police and manage exchange rates.
Which of the following would tend to increase the price of lumber?
a. a technological advance that lowers the cost of cutting timber b. an increase in the demand for newly constructed homes c. a decrease in the demand for wooden rocking chairs d. a decrease in the tax imposed on firms who produce lumber
To contract the money supply, the Fed should
A. increase government spending and cut taxes. B. lower the required reserve ratio. C. sell U.S. government securities. D. reduce the differential between the discount rate and the federal funds rate.