If an individual's income rises 4 percent and his clothing purchases increase 5 percent in response, the income elasticity for clothing by the individual is
A) -0.8.
B) 0.8.
C) 1.25.
D) -1.25.
Answer: C
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The vertical aggregate supply curve is consistent with
a. the classical model b. the short run macro model c. a typical firm's supply curve d. a positive demand shock e. a negative demand shock
The graphs below illustrate the market for a product on which an excise tax has been imposed by government. Refer to the below graph. The excise tax on this product as shown in the graph is ultimately paid:
A. 100 percent by consumers
B. 100 percent by producers
C. 75 percent by consumers and 25 percent by producers
D. 50 percent by consumers and 50 percent by producers
Use the following circular flow diagram to answer the question below.
If box A represents businesses or firms, B the resource market, and C households, and if flow (3) represents money payments to households, then flow (1) would represent
A. consumption expenditures. B. the flow of goods. C. resources. D. payments to resources.
Pricing and output determination under an oligopoly is more complicated than pricing and output determinations in other industries. The primary reason for the complication is the:
a. fewness of firms. b. brand loyalty of consumers. c. powerful effect of advertising. d. variability of concentration ratios. e. mutual interdependence of firms.