If an increase in the excise tax imposed on cigarettes pushes the price per pack up by 20 percent, and the quantity sold declines by 8 percent as a result, the price elasticity of demand for cigarettes is equal to
a. -0.2.
b. -0.4.
c. -0.8.
d. -5.
B
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Consider an industry with two firms producing similar products. Each firm's total cost (in dollars) is given below. Mega Corp: TC = 5,000 + 100Q Big Inc: TC = 4,000 + 200Q For both firms, average total cost:
A. declines as quantity increases. B. declines as quantity increases for Mega Corp and increases as quantity increases for Big Inc. C. increases as quantity increases. D. is constant for all quantities.
If an economy's depreciation is greater than its gross investment, then
A) net investment is negative and saving is negative. B) net investment is positive and saving is positive. C) net investment must equal saving. D) the economy's capital stock decreases. E) net investment is positive and saving is negative.
For every dollar's worth of government securities the Fed sells, the money supply
A) rises by more than $1. B) rises by less than $1. C) falls by less than $1. D) falls by more than $1.
Which of the following is not a property of a firm's cost curves?
a. Marginal cost must eventually rise as a result of diminishing marginal product. b. Average total cost is U-shaped. c. Economies of scale will exist when average total cost falls as output rises. d. Average total cost will cross marginal cost at the minimum of marginal cost.