Which of the following is an example of the law of demand?
A. An increase in the price of tablets is followed by an increase in the sale of tablets.
B. A decrease in the price of milk has no effect on the amount of milk consumed.
C. The amount of smartphones sold increases while the price of smartphones is constant.
D. An increase in the price of magnetic optical disks is followed by a reduction in the amount of magnetic optical disks purchased.
Answer: D
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If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is
a. elastic b. inelastic c. unit elastic d. suggestive of an inferior good e. equal to -20
Economics tells us which resource allocations are preferable.
Answer the following statement true (T) or false (F)
If workers underestimate inflation, the aggregate supply curve will tend to be
a. upward sloping. b. downward sloping. c. vertical. d. horizontal.
When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to
a. equalize private value and private cost. b. equalize private cost and external cost. c. externalize the actions of the buyers and sellers. d. internalize the externality.