A horizontal demand curve shows that demand for a good is _____
a. perfectly inelastic
b. moderately inelastic
c. unit-elastic
d. moderately elastic
e. perfectly elastic
e
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A major problem with the negative income tax is that
a. low tax rates imply low break-even incomes. b. low tax rates imply high break-even incomes. c. high tax rates imply low minimums. d. All of the above are correct.
Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that
a. every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education. b. every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education. c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased. d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased. e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.
A new fertilizer has been discovered that significantly increases the corn crop yield per acre. As a result, the farmers':
A. average total cost curve shifts downward. B. cost curves do not change their shape or position. C. long-run average total cost curve becomes flatter. D. average total cost curves become downward-sloping.
If the Federal Reserve wants to increase the availability of money and credit, it can:
A. lower the discount rate. B. raise the reserve requirements. C. sell U.S. government bonds to the public. D. encourage banks to increase their prime lending rate.