An absolute price elasticity of demand equal to 2 indicates that a
A. 1 percent increase in price leads to a 2 percent decrease in quantity demanded.
B. 10 percent decrease in price leads to a 2 percent increase in quantity demanded.
C. 2 percent increase in price leads to a 10 percent decrease in quantity demanded.
D. 0.2 percent decrease in price leads to a 1 percent increase in quantity demanded.
Answer: A
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In a market in which firms operate in monopolistic competition,
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Tampering with the price mechanism
a. can be efficient for a while. b. cannot be attempted in a market economy. c. can enhance societal welfare if done properly. d. often produces undesired side effects.
If the slope of an indifference curve between two goods decreases as we move from left to right (dropping all minus signs), we infer that the consumer
a. is less willing to trade away a good when he has a lot of it. b. is more willing to trade away a good when he has a lot of it. c. always tries to keep the percentage of his budget spent on each good constant. d. views one of the goods as inferior.
The body that is responsible for dating the beginning and ending dates for a recession is
A) the Fed. B) the Congress. C) the National Bureau of Economic Research. D) the Bureau of Economic Analysis.