In a monopoly where the marginal revenue and price are, respectively, given by $3 and $6, the price elasticity of demand is:
A. ?0.5.
B. ?1.5.
C. ?1.
D. ?2.
Answer: D
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A decrease in government spending will cause a(n) ________.
A. decrease in aggregate demand B. increase in aggregate demand C. decrease in the quantity of real output demanded D. increase in the quantity of real output demanded
If two duopolists can stick to a cartel agreement to boost their prices, then both
A) earn greater profits than if they did not collude. B) price at marginal cost. C) price below average total cost. D) decrease their economic profits. E) increase their production so that each produces more than if they did not collude.
Which of the following will shift the supply curve for laptop computers to the left?
A) development of a cheaper microchip used in laptop computer production B) a subsidy to the laptop computer industry C) expectations of a future decline in laptop computer prices D) a reduction of the number of firms that make laptop computers
When computing a price index, the base year is
A) the earliest year for which data are available. B) the year that is chosen as the point of reference for comparison of prices with other years. C) the most recent year for which data are available. D) the most recent year in which the inflation rate was close to zero.