If the price elasticity of demand for a good is greater than one in absolute value, economists characterize that demand is
A) elastic.
B) inelastic.
C) perfect.
D) vertical.
A
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During a deflationary period,
A) the price level rises. B) the nominal interest rate does not change. C) the nominal interest rate is less than the real interest rate. D) the real interest rate is less than the nominal interest rate.
How are TIPS adjusted for inflation?
A) The interest rate is adjusted for inflation during each period. B) The principal is adjusted once the bond reaches maturity. C) The principal is adjusted for inflation each period. D) The interest rate is adjusted once the bond reaches maturity.
Suppose a new pollution tax of $0.01 per kilowatt-hour of electricity is imposed on coal-fired power producers by the federal government. Which of the following correctly describes how this tax will affect the market for electricity served by these power plants?
a. The supply of electricity will increase. b. The supply of electricity will decrease. c. Demand for electricity will increase. d. Demand for electricity will decrease.
The notion that the second unit of a good consumed improves the happiness of the consumer by less than the first unit improved the happiness of the consumer is summarized as
A. the real-balances effect. B. diminishing marginal utility. C. the substitution effect.