If demand is perfectly inelastic, the price elasticity of demand is equal to:
A. 1.
B. 0.
C. infinity.
D. a negative number between 0 and infinity.
Answer: B
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Now, assume that the government institutes an emission fee of $16 thousand per unit of pollution. How many units of pollution would each polluter abate? Is the $16 thousand fee a cost-effective strategy for meeting the standard? Explain.
Assume that there are two firms, each emitting 20 units of pollutants into the environment, for a total of 40 units in their region. The government sets an aggregate abatement standard (AST) of 20 units. The polluters' cost functions are as follows, where the dollar values are in thousands: Polluter 1: TAC1 = 10 + 0.75(A1)2, Polluter 2: TAC2 = 5 + 0.5(A2)2, MAC1 = 1.5A1, MAC2 = A2.
Answer the following statements true (T) or false (F)
1. The quantity supplied is inversely related to price. 2. If demand and supply increase by the same amount, equilibrium price will rise. 3. If supply increases more than demand, equilibrium price will fall. 4. A change in demand occurs whenever consumers will purchase more because of a decrease in price. 5. An increase in demand tends to increase both the equilibrium price and the amount of a commodity exchanged.
If reserves in the banking system increase by $100, then checkable deposits will increase by $400 in the simple model of deposit creation when the required reserve ratio is
A) 0.01. B) 0.10. C) 0.20. D) 0.25.
A firm will hire additional units of any input up to the point where:
a. the marginal productivity of the input is maximized. b. the marginal cost of employing the input is minimized. c. the expense of employing the last unit is equal to the revenue brought in by the last unit. d. the revenue brought in by the input is maximized.