In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $8 to $7 is equal to
A) 2.50.
B) 1.63.
C) 0.40.
D) 0.62.
E) 1.00.
A
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The imposition of a tax on a good enables the government to
A) raise the price received by sellers of the goods that have been taxed. B) lower the price paid by buyers for the goods that have been taxed. C) create a more efficient economic system. D) take part of consumer and producer surplus as tax revenue when the good is purchased. E) decrease the deadweight loss in this market.
Pollution is an example of a negative externality.
Answer the following statement true (T) or false (F)
The real interest rate is defined as the:
a. fixed rate on consumer loans. b. nominal interest rate minus the inflation rate. c. actual interest rate. d. expected interest rate minus the inflation rate.
Increasing returns to scale:
a) means that output rises proportionately more than inputs, resulting in increasing per unit costs. b) means that output rises proportionately more than inputs, resulting in lower per unit costs in the long run. c) has the same meaning as increasing costs of production. d) means that output rises proportionately less than inputs, increasing per unit cost of production in the short run. e) implies that the long-run average cost curve is shifting downward.