Demand for cocaine is unit Elastic, price of cocaine were to rise 10%,
a. Quantity consumed would fall 10%
b. Dealer income from the sale of cocaine would fall 10%
c. ANSWER is both FALSE
b. Dealer income from the sale of cocaine would fall 10%
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Explain how the price system eliminates a shortage
What will be an ideal response?
If the government cut expenditures during an expansion
a. it would have to raise the tax rate b. it would tend to stabilize the economy c. both a and b d. neither a nor b
When unemployment insurance benefits exceed the wages a worker could earn when employed, the worker will have an incentive to:
A. have his/her unemployment insurance benefits cancelled. B. decrease his/her reservation price. C. remain unemployed longer than otherwise. D. accept the first job offered.
If spending decreased by $400, and the GDP decreased $1,000 as a result, the MPC must be:
A. 2.5 B. 0.75 C. 4 D. 0.60