Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product
A) 2; The product is elastic. B) 0.5; The product is inelastic.
C) 0.2; The product is inelastic. D) 50%; The product is inelastic.
B
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Forecasts based on the extrapolation of observed trends and relationships are likely to be accurate, if ________
A) changes in expectations are properly considered B) policy actions are anticipated C) economic behavior is guided by rational expectations D) policy changes are understood to be permanent
When something is indexed:
A. its value is automatically adjusted in proportion to the cost of living. B. it is expressed as nominal value multiplied by price index. C. its real value is converted into nominal terms for comparison. D. its relative rank in consumption items is compensated for relative to its cost.
Which of the following will not cause consumption, and as a result, aggregate demand, to increase?
a. an optimistic business forecast of future income growth b. a tax cut c. an increase in consumer confidence d. a tax increase
Unlike economic profit, economic rent:
A. may not be driven to zero by competition. B. doesn't involve opportunity costs. C. can be less than zero. D. only applies to land.