A positive cross elasticity indicates a substitute relationship
Indicate whether the statement is true or false
True
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The velocity of money is
a. the rate at which the price index for consumer goods rises. b. the multiple by which an increase in government expenditures will cause output to rise. c. set by the Board of Governors of the Federal Reserve System. d. the average number of times one dollar is used to buy final goods and services during a year.
Consumer surplus received from the purchase of a good is $300 . If the producer surplus received for the same good is $600, then the total surplus is $300
a. True b. False Indicate whether the statement is true or false
If a book has a royalty rate of 15% and 12,000 copies are sold to bookstores at $50 each, the bookstore returns 2000 unsold books to publishers, and the bookstore sells the books to students for $62.50, the author will be paid
A. $93,750 (.15*62.50*10,000). B. $90,000 (.15*50*12,000). C. $112,500 (.15*62.50*12,000). D. $75,000 (.15*50*10,000).
The principle of second best states that
A. the more inelastic the demand for a product, the less distortionary a tax on the product would be. B. the broader based the tax, the less distortionary it is. C. taxes should be constructed so that they are neutral. D. if previously existing distortions exist, a distortionary tax may actually improve efficiency.