Which of the following generalizations is correct? Demand tends to be
A. relatively more inelastic for a product considered a necessity.
B. relatively more inelastic when more substitutes are available for a product.
C. relatively more inelastic the more time consumers have to respond to price changes.
D. relatively more elastic when the price of a good or service, as a proportion of income, is smaller.
Answer: A
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The managers of Movies Plus, a large movie theater, want to practice third-degree price discrimination. The managers have learned that college students have an own price elasticity of demand of 1.5 for tickets at Movies Plus and adults have an own price elasticity of 1.2. If the managers have correctly determined the third-degree profit-maximizing price for adults is $15, what is the third-degree
profit-maximizing price to charge students? A) $7.50 B) $8.50 C) $10.00 D) $13.50
A firm will hire a unit of input up to the point where
A) the marginal cost of the input equals the marginal cost of output. B) the marginal revenue product of the input is equal to the marginal factor cost of the input. C) the price of the input is equal to the price of output. D) the marginal physical product of the input is equal to the price of output.
With a strong and active federal government, why do we need state and local governments?
In the Keynesian analysis of macroeconomic equilibrium, the key determinant of real GDP is
A. national income. B. aggregate supply. C. aggregate demand. D. disposable income.