Suppose we observe that a firm's total revenue doesn't change when price and quantity change by the same percentage. Which of the following is a possible value of its price elasticity of demand?
A. 0
B. 0.5
C. 1
D. 2
Answer: C
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An average cost pricing rule for a natural monopoly sets the price ________ the marginal cost, thereby ________ a deadweight loss
A) below; avoiding B) below; creating C) above; avoiding D) above; creating
In the short run,
a. spending determines income, but not the other way around b. income determines spending, but not the other way around c. spending determines the interest rate, but not the other way around d. spending determines income, and income determines spending e. spending determines the productivity, and productivity determines spending.
If gas prices today were $2.50 per gallon, in terms of history, this would be
A. not an all-time high but rather high in inflation-adjusted terms. B. an all-time high in nominal terms. C. about the long-term historical average in inflation-adjusted terms. D. an all-time high in inflation-adjusted terms.
When the price level rises and the money wage rate does not change,
A) the quantity of potential GDP increases because the quantity of real GDP supplied increases. B) the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change. C) existing businesses do not change their level of output. D) profits fall and more businesses fail. E) the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change.