If the elasticity of demand is 3, then a 10 percent increase in price will cause quantity demanded to fall by 3 percent.
Answer the following statement true (T) or false (F)
False
The formula for price elasticity is the percentage change in quantity demanded divided by the percentage change in price. So 3 = x/.10=.3 or 30 percent, not 3 percent.
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied?
A) 5 units B) 10 units C) 15 units D) 20 units
In a frictionless world
A) Fully funded social security must necessarily make everyone better off, as it provides for retirement. B) Fully-funded social security is a constraint on private saving behavior, and therefore cannot make anyone better off. C) Fully funded social security is always preferred to pay-as-you-go social security. D) Fully funded social security is more efficient, because it is a private program instead of a government program.
Market power is the power to produce at the lowest cost.
Answer the following statement true (T) or false (F)