If demand for a good is elastic, then the price elasticity will be:
A. equal to one.
B. equal to zero.
C. greater than one.
D. less than one.
Answer: C
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Determine whether each of the following outputs is considered an intermediate good, a final good, or neither for purposes of calculating GDP in the current year
a. New tires put on a new Corvette at Big O Tire store b. The net sales price of a home built in 1990 when it is resold in 1997 c. The commission earned by a stock broker on the sale of stock d. The net price that is paid for 1000 shares of stock in Dell
Identify an example of a stock variable
a. The growth in investment in an economy b. The change in the price level in an economy over the years c. The number of unemployed people in an economy in a particular year d. The increase in the money supply in an economy e. The fall in consumer spending during two consecutive years
Under a flexible exchange rate system, which of the following will be most likely to cause a depreciation in the exchange rate value of the dollar (relative to the English pound)?
a. An economic boom occurs in England, inducing English consumers to buy more American-made automobiles, trucks, and computer products. b. Real interest rates in the United States fall lower than real interest rates in England. c. Restrictive monetary policy in the United States causes inflation to be lower than in England. d. Attractive investment opportunities in the United States induce English investors to buy stock in U.S. firms.
Consider two craft bourbons distilled in Brooklyn, New York: Kings County and Stillhouse. If the distilleries advertise, they can both sell more bourbon and increase their revenue. However, the cost of advertising more than offsets the increased revenue
so that each distillery ends up with a lower profit than if they do not advertise. On the other hand, if only one advertises, that distillery increases its market share and also its profit. a. Construct a payoff matrix using the following hypothetical information: If neither distillery advertises, each earns a profit of $500,000 per month. If both advertise, each earns a profit of $250,000 per month. If one advertises and the other does not, the distillery that advertises earns a profit of $750,000 and the distillery that does not advertise earns a profit of $125,000. b. If Kings County wants to maximize profit, will it advertise? Briefly explain. c. If Stillhouse wants to maximize profit, will it advertise? Briefly explain. d. Is there a dominant strategy for each distiller? Briefly explain.