A 10 percent increase in the price of butter reduces butter consumption by about 5 percent. The increase causes households to
a. spend more on butter.
b. spend less on butter.
c. spend the same amount on butter.
d. consume more goods like bread that are complements of butter.
A
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Using the figure above, suppose a subsidy of $15,000 per student is provided to private colleges. Then, the market equilibrium occurs at a tuition of ________ a year and ________ million students
A) $10,000; 15 B) $25,000; 15 C) $15,000; 15 D) $15,000; 7.5 E) $20,000; 20
Deadweight losses are associated with monopolistic competition:
a. In the short run, but not the long run b. In the long run, but not the short run c. In both the short and long run d. In neither the short run nor the long run
A spurious correlation refers to a situation where:
A. two variables are related through their correlation with a third variable. B. the correlation coefficient between two variables cannot be estimated. C. there is direct causal relationship between two variables but tests for correlations reject this relationship. D. the correlation between two variables is positive till the sample size reaches a threshold, and negative after the sample size crosses the threshold.
Which of the following demonstrates the ideal use of expansionary fiscal policy?
A. The government slowly hires unemployed workers and puts them to work on permanent projects that continue long after the economy recovers. B. The government quickly hires already-employed workers and puts them to work on projects that are finished as the economy recovers. C. The government quickly hires unemployed workers and puts them to work on projects that are finished as the economy recovers. D. The government quickly hires unemployed workers and puts them to work on permanent projects that continue long after the economy recovers.