Demand is said to be elastic if a ______.
a. 3 percent price increase causes a 2 percent reduction of quantity demanded
b. 5 percent price increase causes a 5 percent reduction of quantity demanded
c. 5 percent price increase causes a 40 percent reduction of quantity demanded
d. 10 percent price increase cause an 8 percent reduction of quantity demanded
c. 5 percent price increase causes a 40 percent reduction of quantity demanded
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There are two people in an economy. Person A’s demand for a public good is Q = 10 - P and person B’s demand is Q = 20 - 2P. The highest total that A and B will be willing to pay for six units of the public good is
a. $3 b. $4 c. $7 d. $11
Suppose the world price of a shirt is $10. If the United States imposes a tariff of $5 a shirt, then the price of a shirt in the
A) world rises to $5. B) United States rises to $15. C) United States falls to $5. D) world rises to $15 E) world falls to $5.
The primary purpose of WTO is to:
a. protect the United States from cheap foreign labor. b. foster trade among nations. c. promote the dumping of foreign products. d. increase worldwide tariffs. e. form a union of European nations.
Which of the following methods could be used to correct for external costs?
A) Impose a tax or an effluent fee on the offenders. B) Have the offender clean up the pollution it caused. C) Require firms in the industry to install pollution control devices. D) All of the above would be appropriate.