Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:
A. zero.
B. infinite.
C. one.
D. unknown.
Answer: B
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A regressive tax means that if someone earning $25,000 pays $5,000, someone earning $50,000 must pay
A. less than $5,000. B. more than $15,000 but less than $20,000. C. less than $10,000. D. more than $10,000 but less than $15,000.
Use the following graph to answer the next question.
If the industry operates as a pure monopoly, the profit-maximizing quantity of output would be ________.
A. a level that is not labeled in the graph B. 195 C. 160 D. 90
Suppose the economy is initially in short-run equilibrium and the Fed decreases the nominal money supply. If the price level remains constant, real GDP will ________ relative to potential GDP and the real interest rate will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Optimal resource allocation is achieved if P = MC
Indicate whether the statement is true or false