Why do you think that the demand for coffee is less elastic than the demand for restaurant meals?
What will be an ideal response?
It may have to do with the availability of good substitutes or percentage of the consumer's budget. People can always eat at home. But it's harder to find a good substitute for coffee, so people are less sensitive to coffee price changes than to restaurant meal price changes. Also coffee is a much smaller percentage of the consumer's budget than meals.
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When considering the socially optimal amount of pollution, the benevolent social planner takes into account any laws regarding pollution
Indicate whether the statement is true or false
The balance of trade is measured by which of the following expressions?
a. The value of exported goods and services minus the value of imported goods and services b. The value of income receipts on investments minus income payments on investments c. The value of goods exports minus the value of goods imports d. The value of government spending minus the value of all taxes received e. The balance on capital account plus the balance on current account
A price increase causes a consumer's "real" income to:
A. increase. B. remain unchanged. C. decrease. D. decrease or increase depending on the size of the price change.
If the average price of a car suddenly changes from $20,000 to $15,000, larger, more remote stores with lower prices are ________ to have a(n) ________ in the number of customers.
A) likely; increase B) not likely; change C) not likely; increase D) likely; decrease