Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is
a. 0.33.
b. 0.45.
c. 2.20.
d. 3.00.
c
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According to the intertemporal substitution effect, a fall in the price level will
A) decrease the real value of wealth, which increases the quantity of real GDP demanded. B) cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases. C) increase net exports, which causes the quantity of real GDP demanded to increase. D) increase the real value of wealth, which raises the interest rate so that the quantity of real GDP demanded decreases.
Diseconomies of scale definitely means that as the firm increases its output, its
A) long-run average total cost increases. B) long-run average total cost decreases. C) short-run average total cost increases. D) short-run average total cost decreases.
The federal government budget deficits of the late 2000s were driven by:
a. foreign trade deficits. b. increases in government spending. c. declines in tax rates and tax revenue. d. excessive money growth. e. both b and c.
This table shows individual demand schedules for a market.
According to the table shown, what can be said of Betty and Barney's demand for this good?
A. Betty's and Barney's demand both follow the law of demand.
B. Barney's demand follows the law of demand, but Betty's does not.
C. Betty's demand follows the law of demand, but Barney's does not.
D. Neither Betty's nor Barney's demand follows the law of demand.