It is estimated that a 3 percent drop in the price of Asian and European cars will decrease the demand for American cars by 0.84 percent. From this information one can conclude that:
A. the income elasticity of demand for American cars is less than 1.
B. European and Asian cars are complements for American cars.
C. European and Asian cars are substitutes for American cars.
D. European and Asian cars are luxuries.
Answer: C
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To have an effective price support program, the government must
i. isolate the domestic market from the world market. ii. pay the farmers a subsidy. iii. introduce a price floor. A) i only B) ii only C) iii only D) ii and iii E) i, ii, and iii
In the above table, the inflation rate between 2012 and 2013 is approximately
A) 0.9 percent. B) 1 percent. C) 10 percent. D) 100 percent.
Suppose that a powerplant is given a permit to pollute 10 tons of carbon into the atmosphere. As the powerplant operates, it can generate $200 of profit selling electricity per ton of carbon that it sends into the atmosphere. If the price of the carbon permit is $300 per ton, then:
A. the powerplant is better off shutting down and selling its permit. B. the powerplant is better off buying more permits and selling more electricity. C. the powerplant is better off selling electricity and using the permits to pollute 10 tons of carbon. D. the powerplant is better off shutting down and buying more permits.
Physical capital is the:
A. physical labor of workers. B. financial resources available for investment. C. talents, training, and education of workers. D. factories and machinery used to produce other goods and services.