Suppose that Sally always buys exactly 5 bars of English toffee each week, regardless of whether the toffee bars are regularly priced at $1 or on sale for $0.50 . Based on this information, what is Sally's price elasticity of demand for English toffee in this price range?
a. Cannot be determined.
b. 0
c. Infinity
d. 1
b
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The average propensity to consume is
A) real consumption expenditures divided by real saving. B) real saving divided by real consumption expenditures. C) real consumption expenditures divided by real disposable income. D) real disposable income divided by real consumption expenditures.
A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is
A) 0.5. B) 2.0. C) 10.0. D) 20.0.
How does a market system prevent people from getting as many goods and services as they wish?
A) In a market system, firms can charge any price they want, thus preventing poor people from getting as many goods and services as they wish. B) Governments interfere with the market mechanism to influence the allocation of goods and services. C) The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor. D) The government imposes taxes on those who earn beyond a certain amount of income.
Collusion among monopolistic firms:
A. Is common in world markets, but does not happen in the U.S. B. Becomes more difficult if there were fewer firms in the group C. Becomes easier during a recession when sales are falling D. Becomes more difficult if the firms all have different cost and demand curves