If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________
A) 0.33
B) 0
C) negative
D) 3.00
D
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Which of the following statements is FALSE?
A) Cartels only form among members of an oligopoly. B) A cartel might form if members believe they can increase profits by coordinating activity. C) Members of a cartel produce less output than that produced in a competitive market. D) Cartel members often have an incentive to cheat.
Investment in human capital has opportunity costs, but investment in physical capital does not
a. True b. False Indicate whether the statement is true or false
When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost,
a. the firm must be earning a positive economic profit. b. the firm may be incurring economic losses c. there is a deadweight loss to society, but it is exactly offset by the benefit of excess capacity. d. new firms will enter the market in the long run.
On January 1, 2001, El Salvador "dollarized" its economy. The U.S. dollar circulated throughout the country along with the Salvadoran colon for the first year. By the end of 2002, the official currency circulating in the economy was the U.S. dollar. El Salvador abandoned its own currency and adopted the currency of the United States because:
A. the government would still be able to finance deficits by printing U.S. dollars, and inflation would be under control. B. the government would still be able to run deficits by printing money. C. with dollars, monetary policy would be more effective at offsetting demand shocks in the economy. D. the government would no longer be able to finance deficits by printing money, and inflation would be under control.