When a 2 percent increase in the price of automobiles generates a greater than 2 percent decrease in quantity demanded, then
a. price elasticity of demand for automobiles is less than one
b. total revenue increases
c. demand is price inelastic
d. demand is unit elastic
e. total revenue decreases
E
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An increase in demand will cause the demand curve to
a. move to the right. b. move to the left. c. become more vertical. d. become more horizontal.
Tom is a castaway who washes up on a remote island. He can kill eight birds per hour or catch ten fish per day. The natives on the island can kill ten birds per day or catch twenty fish per day. The natives have a comparative advantage in: a. hunting birds
b. fishing. c. both hunting birds and fishing d. neither hunting birds or fishing.
Automatic stabilizers in the United States are: a. changes in government transfer payments and tax revenues that vary automatically and inversely to business cycle changes. b. controlled by the Federal Reserve System to help control the business cycle
c. able to completely eliminate all the lag problems associated with fiscal policy. d. none of the above.
Exhibit 4-5 Supply and demand curves for computers
Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?
A. Lower costs for computer chips and motherboards. B. The failure of several computer manufacturers. C. Higher prices for computer software. D. More features and greater ease of use.