If 20 percent increase in the price of a good leads to a 60 percent decrease in the quantity demanded, then what is the price elasticity of demand?
A. 1/6.
B. 1/3.
C. 30.
D. 3.
Answer: D
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If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds, then
A) she would be unable to earn a normal profit. B) there is no cost associated with the expansion. C) she would forego the opportunity to earn interest on the money. D) the amount of her funds she used is an explicit cost. E) the amount of her funds she used is part of her normal profit.
Brittany provides manicures at the only salon in town. Her marginal cost is constant at $5 per client, her fixed cost is $25 per day, and she is able to do 8 manicures per day. On a given day, half of her clients are willing to pay $15 for a manicure; half are willing to pay only $10 . If she charges all of her clients $10, then her maximum daily profit equals
a. $80 b. $15 c. $40 d. $55 e. $50
The argument that the government should impose tariffs in order to protect domestic jobs ignores the impact of tariff policy on
a. domestic industries that compete with imports. b. the country’s export-producing industries. c. employees in domestic industries that compete with imports. d. suppliers to domestic industries that compete with imports.
Table 36-1Suppose the economy of Macroland is described by the following:C = 200 + 0.8 DI (DI = disposable income)I = 300 + 0.2Y?50r (Y = GDP)(r, the interest rate, is measured in percentage points. For example, a 9 percent interest rate is r = 9).For this economy, assume that the Federal Reserve uses its monetary policy to peg the interest rate atr = 5G = 750T = 0.25YX = 200M = 150 + 0.2YHint: DI = Y?T From Table 36-1, find the budget deficit or surplus for Macroland.
A. 125.50 B. ?93.75 C. ?126.25 D. ?154.75