Which is not characteristic of a product with relatively inelastic demand?
A. The good is regarded by consumers as a necessity.
B. Buyers spend a small percentage of their total income on the product.
C. There are a large number of good substitutes for the good.
D. Consumers have had only a short time period to adjust to changes in price.
Answer: C
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The natural rate hypothesis asserts that
A) changes in the unemployment rate from changes in the inflation rate are temporary. B) changes in the unemployment rate are natural and long-lasting. C) when prices change, the inflation rate changes temporarily and then returns to its natural rate. D) changes in the natural unemployment rate are only temporary. E) price changes occur at a natural rate, near a 6 percent average inflation rate.
Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50
Sonya currently buys 4 magazines and 12 chocolate bars. To maximize her utility, she should A) buy more chocolate bars and fewer magazines. B) buy more magazines and fewer chocolate bars. C) buy more of both goods. D) stay with the current combination of goods.
Business cycles are best categorized as
(a) fluctuations in the production and employment levels in the business sector of the economy. (b) major upswings and downturns in most sectors of the economy. (c) variations in international trade. (d) all of the above.
In the text, the authors present evidence that the market for free agents in professional baseball is subject to the lemons problem. How could a prospective free agent overcome this problem when seeking a new contract?
A) Agree to accept a lower salary with a new team. B) Rely on standardization to avoid the asymmetric information problem. C) Decide to negotiate only with their current team. D) Develop a reputation as a reliable and productive player.