The difference between price elasticity of demand and income elasticity of demand is that
A) income elasticity of demand examines how an individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes.
B) income elasticity refers to the movement along the demand curve while price elasticity refers to a horizontal shift of the demand curve.
C) income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price.
D) income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve.
Answer: D
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Under a "crawling peg" system, a country's exchange rate
A) is fixed except for small, surprise changes. B) changes at a predetermined rate against the dollar or some other major currency. C) can fluctuate within a narrow band. D) can change, but the changes are kept secret from the public. E) is determined by the central bank of another country.
Owners of a taco shop finds that they can sell 150 tacos a day when the price of a taco is $1.20. When they price tacos at $1, they sell 170 tacos. The absolute value of the price elasticity of demand for tacos is
A. 1.45. B. infinity. C. 1.00. D. 0.69.
A currency depreciation is inflationary and probably also expansionary.
Answer the following statement true (T) or false (F)
When a proposed merger between two companies is reviewed by the government, the relevant market is defined by
A) whether or not there are close substitutes for the products of the two firms. B) how elastic the demand is for each firm's product. C) counting the number of firms that produce the same product. D) how much advertising is done in the industry.