If the percentage change in price is 10%, and the percentage change in quantity supplied is 5%, then the supply for the good is
A. perfectly inelastic.
B. inelastic.
C. elastic.
D. unit elastic.
Answer: B
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Which of the following holds true, if goods sell for the same price worldwide when converted to a common currency?
a. A high rate of inflation exists. b. A fixed exchange-rate system exists. c. Purchasing power parity exists. d. The foreign exchange market is in equilibrium. e. Arbitrage opportunities exist.
Which of the following would increase labor productivity, ceteris paribus?
A. A decrease in the quantity of capital. B. An increase in the number of participants in the labor force. C. An increase in the quality of capital. D. Crowding out.
The interest rate is the price borrowers pay to borrow money. Key interest rates are controlled by the Federal Reserve System. If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to
A. increase. B. decrease. C. not change. D. be influenced by the interest rate, but with an uncertain effect.
The figure below depicts the relationship between the social benefits and social costs associated with different levels of pollution. The two curves are Social Marginal Cost (SMC) and Social Marginal Benefit (SMB). The other terms are P = Price of the commodity, MC = Marginal Cost (private), and MB = Marginal Benefit (private). For pollution level 'a', ________, therefore the country should ________ pollution.
A. SMB > SMC; increase B. SMB > SMC; decrease C. SMC < MC = P = MB; decrease D. SMC = MC; decrease