Perfectly elastic demand has an elasticity value of zero.
Answer the following statement true (T) or false (F)
False
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The ability to set a price greater than marginal cost guarantees an economic profit for the monopolistic competitor (assuming P > AC)
Indicate whether the statement is true or false
Refer to the above graphs. Which pairs of budget constraints represent only a decrease in the price of good A, but no change in income or change in the price of good B?
A. Graph A B. Graph B C. Graph C D. Graph D
Economists assume that, in general, when individuals are faced with two choices that have the same expected value, they will prefer:
A. the one with higher risk. B. the one with lower risk. C. the one with the higher opportunity cost. D. the one with the lower future value.