Suppose a monopolist faces a constant elasticity market demand curve with price elasticity equal to -2. What will be the price charged by this monopolist assuming constant marginal cost of 10.
A. 100
B. 80
C. 50
D. 30
E. 20
F. 10
G. infinity
H. None of the above
Answer: E
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Which of the following will not cause the demand curve for good X to shift?
A) a change in the price of X B) a change in the price of Y, a complement C) a change in the price of Z, a substitute D) an increase in average disposable real income
Suppose Congress decides to reduce government expenditures by reducing its purchases of weapons systems. Which of the following would you expect to occur as a result of this change? a. The economy will move up and to the left along the short-run Phillips Curve. b. The economy will move down and to the right along the short-run Phillips Curve. c. The short-run Phillips Curve will shift to the
left. d. The short-run Phillips Curve will shift to the right.
This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase.
Suppose the marginal cost and marginal benefit curves were MC0 and MB0 several decades ago. However, because information about this product is now available online, the:
A. demand for information will increase. B. optimal amount of information will increase. C. optimal amount of information will stay the same, but it will cost less to acquire. D. optimal amount of information will decrease.
Tom Atoe grows fruits and vegetables for home consumption. This activity is:
A. excluded from GDP in order to avoid double counting. B. excluded from GDP because an intermediate good is involved. C. productive but is excluded from GDP because no market transaction occurs. D. included in GDP because it reflects production.