Explain the three possible ranges for price elasticity of demand
What will be an ideal response?
If the percentage change in quantity demanded is greater than the percentage change in price, then quantity demanded is very responsive to changes in price, and demand is elastic (Ep > 1). If the percentage change in quantity demanded is less than the percentage change in price, then quantity demanded is not very responsive to a price change and demand is inelastic (Ep < 1). Demand is unit elastic (Ep = 1 ) if the percentage change in quantity demanded equals the percentage change in price.
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When the U.S. government launched a massive rescue plan in response to the 2008-2009 financial crisis, the overall demand for loanable funds ________ because the ________
A) decreased; demand by households, businesses, and financial institutions changed by the same amount as the federal government demand B) did not change; demand by households, businesses, and financial institutions changed by the same amount as the federal government demand C) increased; demand by households, businesses, and financial institutions increased as did the federal government demand D) decreased; demand by households, businesses, and financial institutions decreased by more than the federal government demand increased E) increased; demand by households, businesses, and financial institutions increased by more than the federal government demand increased
The sale of $1 billion of securities to a bank or some other business by the Fed is an example of
A) a last resort loan. B) a multiple contraction of the quantity of money. C) an open market operation. D) a change in the required reserve ratio.
States are required by federal laws to offer child-support enforcement to all parents who request it
Indicate whether the statement is true or false
Consider a nation with an endowment of iron ore and petroleum. If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:
a. on its production possibilities curve. b. outside its production possibilities curve. c. inside its production possibilities curve. d. on the highest achievable production possibilities curve. e. on the lowest production possibilities curve.