Those who oppose the legalization of cocaine and heroin argue that:
A. addict demand is inelastic, but the demand by occasional users is elastic.
B. demand is highly elastic for both addicts and occasional users.
C. demand is inelastic for both addicts and occasional users.
D. addict demand is elastic, but the demand by occasional users is inelastic.
Answer: A
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An example of the specificity rule in action is
A. imposing price floors on "clean" products as a way to increase the demand for these products. B. taxing the production of a product whose production creates a great deal of pollution. C. taxing the consumption of a product whose production creates a great deal of pollution. D. restricting imports to reduce environmental pollution.
Let P be the price of a good and let I represent consumer income. Which of the following demand functions represents a luxury good with inelastic price response?
A) log(Q) = 4 – 2 log(P) + 2 log(I) B) log(Q) = 4 - 0.5 log(P) + 0.25 log(I) C) log(Q) = 4 - 0.25 log(P) + 2 log(I) D) log(Q) = 4 + 2 log(P) + 0.2 log(I)
Marginal revenue is the change in total revenue from using one more unit of an input in the short run
a. True b. False
We expect a rise in transfer payments when
a. the needs of the poor receive more publicity b. taxes rise c. GDP rises and inflation soars d. the retirement age remains unchanged over time e. recessions occur