A lower price elasticity of demand coefficient occurs when:
A. many substitutes exist.
B. the quantity demanded is more responsive.
C. few substitutes exist.
D. the market is broadly defined.
Answer: C
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If the price level rises by 2 percent and workers' money wages increase by 2 percent, then the
A) quantity of labor supply decreases. B) quantity of labor supply increases. C) quantity of labor supplied does not change because there is no change in the real wage rate. D) More information about the dollar change in the price level and money wage rate are needed to answer the question.
Economists agree that a monopolistically competitive market structure
A) can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products. B) lowers consumer utility because consumers pay a price higher than the marginal cost of production. C) is detrimental to society because it leads to a waste of scarce resources. D) benefits consumers because firms produce products that appeal to a wide range of consumer tastes.
Consider two coupons: one offers 50 percent off a scarf that costs $20, and the other offers 5 percent off a jacket that costs $200. Using either coupon requires driving to the shopping mall across town. According to the Weber-Fechner law, which coupon will people tend to perceive as being more valuable?
A. Neither coupon will be of value to anyone since both require driving across town. B. They will be seen as equally valuable since both lead to a savings of $10. C. The coupon for the jacket since $200 is greater than $20. D. The coupon for the scarf since 50 percent is greater than 5 percent.
At the equilibrium level of real GDP, total production equals total:
A. saving. B. investment. C. net exports. D. spending.