The formula for price elasticity of demand that is used in practice
A. usually drops all minus signs.
B. usually takes on different values at different points on the demand curve.
C. may calculate the percentage change in price between P1 and P2 as “(P2 ? P1) as a percentage of (P1 + P2)/2.”
D. All of the responses are correct.
Answer: D
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Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. Which of the following statements comparing the conditions in the industry under both market structures is true?
A) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good. B) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. C) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. D) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good.
Which of the following would generally cause firms to expand output in the short run?
a. a proportional increase in the prices of goods and services and the costs of producing them b. higher profit margins as the result of an unexpected increase in the prices of goods and services c. an unexpected reduction in aggregate demand d. an increase in wages and the prices of other resources
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns
to complete equilibrium. a. The quantity of real loanable funds per time period remains the same and reserve-related (central bank) transactions become more positive (or less negative). b. The quantity of real loanable funds per time period falls and reserve-related (central bank) transactions remain the same. c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same. d. The quantity of real loanable funds per time period rises and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
In the long run, demand-pull inflation leads to:
A. Higher unemployment and higher price level B. Lower real wages and higher unemployment C. Lower real output and no change in unemployment D. Higher price level and no change in real output