When raising taxes, the quantity effect tells us that the:
A. government gets more revenue per units sold.
B. higher tax rate causes fewer units to be sold.
C. government gets less revenue per unit sold.
D. higher tax rate causes more units to be supplied.
B. higher tax rate causes fewer units to be sold.
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With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?
A) The absolute value of the price elasticity coefficient has probably gone down. B) It has become more price inelastic. C) It has become more income elastic. D) It has become more price elastic.
If a 10 percent decrease in the price of a good leads to a 20 percent increase in the quantity demanded, then what is the price elasticity of demand?
A. 10 B. 2 C. 0.5 D. 20
Suppose the price level falls. Because of fixed nominal wage contracts, firms become less profitable and they cut back on production. This is a demonstration of the
A. classical dichotomy theory of the short-run aggregate-supply curve. B. sticky-wage theory of the short-run aggregate-supply curve. C. misperceptions theory of the short-run aggregate-supply curve. D. sticky-price theory of the short-run aggregate-supply curve.
Demand-pull inflation is associated with:
A. decreasing total spending (demand). B. increasing total spending (demand). C. decreasing costs of production (supply). D. increasing costs of production (supply).