Consumers buy less of a good as its price increases because
a. production costs have risen.
b. substitute goods are now relatively cheaper.
c. the income of consumers has effectively risen.
d. the higher price will make the good more valuable to each consumer.
B
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If the exchange rate is constant and U.S. exports increase, then in the foreign exchange market the
A) supply of U.S. dollars increases. B) demand for U.S. dollars increases. C) demand for U.S. dollars decreases. D) quantity of U.S. dollars demanded decreases. E) quantity of U.S. dollars demanded increases.
Using Figure 6-3(b), as price falls from $15 to $6, the elasticity of demand is (dropping all minus signs)
A. 0.857. B. 1.167. C. 1.0. D. 0.67.
Suppose a monopolist and a competitive price-taker firm have the same cost curves. The monopoly firm would
a. charge a lower price than the competitive price-taker firm. b. charge a higher price than the competitive price-taker firm. c. charge the same price as the competitive price-taker firm. d. refuse to operate in the short run unless an economic profit could be made. e. refuse to operate in the short run if an economic loss was present.
Which of the following formulas measures the rate of substitution for labor with capital?
A. -?L/?K B. -?K/?L C. ?K/?L D. ?L/?K