The price elasticity of demand for leisure air travel is -1.60. Therefore, a
A. 16 percent decrease in the price of leisure air travel will cause a 10 percent increase in the amount of leisure air travel.
B. 10 percent decrease in the price of leisure air travel will cause a 16 percent increase in the amount of leisure air travel.
C. a 16 percent decrease in the price of leisure air travel will cause a 10 percent decrease in the amount of leisure air travel.
D. 10 percent decrease in the price of leisure air travel will cause a 16 percent decrease in the amount of leisure air travel.
Answer: B
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Use the following graph for a perfectly competitive firm to answer the next question.
At its short-run equilibrium point, the firm's
A. marginal revenue equals its average variable cost. B. marginal cost equals its average fixed cost. C. marginal revenue equals its average total cost. D. marginal cost equals its average variable cost.
If government expenditures are increased by $50 billion, assuming all other factors stay constant, we would expect the initial impact of the increased spending to cause real GDP to
A. increase by $50 billion. B. stay constant. C. increase by less than $50 billion. D. increase by more than $50 billion.
At the current level of output, the marginal social benefit from a slice of pizza is less than the marginal social cost of producing a slice of pizza
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Health care markets may be inefficient because of
A. poor information. B. adverse selection. C. moral hazard. D. all of these answer options are correct.