Which of the following describes a situation in which demand must be inelastic?
a. Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
b. Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent
c. Total revenue increases by more than 10 percent when the price of spats rises by 10 percent.
d. Total revenue decreases by $10 when the price of spats rises by $10.
e. Total revenue decreases by more than $10 when the price of spats rises by $10.
C
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The purpose of a Clarke tax is to
a. give people an incentive to truthfully reveal their preferences for a public good. b. raise enough revenue to pay for a public good. c. give producers an incentive to supply nonrivalrous public goods in socially efficient quantities. d. prevent the dissipation of rents that would occur with a nonexcludable public good.
If the equilibrium price of a good decreases and the equilibrium quantity of the good decreases, we can conclude that
A) demand decreased. B) supply increased. C) demand increased. D) supply decreased.
The increase in tax on state bank notes from 2 to 10 percent provided state banks incentive to
(a) attract more demand deposits and increase the use of checks. (b) increase the amount of state notes and use them to extend bank credit. (c) increase the minting of coins and use them for exchange and lending purposes. (d) all of the above.
Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi’s demand curve?
a. 0.1 b. 0.8 c. 1.0 d. 10.0