The price elasticity of demand coefficient for a good will be lower:
a. if there are few substitutes for the good.
b. if expenditure on it is a small part of one's budget.
c. both a and b are true.
d. neither a nor b are true.
c
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According to the Taylor rule, the Federal Reserve lowers the real interest rate as the output gap ________ or the inflation rate ________.
A. decreases; increases B. increases; decreases C. decreases; decreases D. increases; increases
A firm that practices group price discrimination will set the lower price in the market that has the most elastic demand
Indicate whether the statement is true or false
An open-market sale of T-bonds by the Fed causes the money supply to
A. fall and bond prices to fall. B. rise and bond prices to fall. C. rise and bond prices to rise. D. fall and bond prices to rise.
If the price of a firm's product is $12 and the firm faces a constant marginal cost of $5 that is equal to its (constant) average total cost, the profit from selling a unit of the firm's product from its inventory is equal to ________.
A) $5 B) $7 C) $8 D) $15