Which of the following statements about the price elasticity of demand is correct?
A) The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good.
B) Demand is more elastic in the long run than it is in the short run.
C) The absolute value of the elasticity of demand ranges from zero to one.
D) Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.
B
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Some popular reality television programs follow people who buy the contents of abandoned storage lockers at public auctions. In most cases, several storeage lockers are sold in sequence during a particular auction
Occassionally, one of the buyers will purposefully bid much more than the expected value of a particular storage locker in order to intimidate the other bidders. What is a plausible explanation for these excessive bids? A) The buyer is trying to establish a reputation that may affect the outcome of later auctions. B) The excessive bids may be rational if they occur during the last auction of the day. C) The bidder is trying to establish a first-mover advantage, but only if they occur during the first auction of the day. D) The excessive bids represent a form of tacit collusion among the buyers.
Finding a small value of the p-value (e.g. less than 5%)
A) indicates evidence in favor of the null hypothesis. B) implies that the t-statistic is less than 1.96. C) indicates evidence in against the null hypothesis. D) will only happen roughly one in twenty samples.
Suppose a Lexus LS400 and a Mercedes C300 are considered to be of equivalent value. The Lexus sells for 6,000,000 Japanese yen in Tokyo and the Mercedes sells for 50,000 euros in Stuttgart. Using the purchasing power parity theory, explain the exchange rate between the yen and the euro
The textbook suggests that rent controls
A. actually contribute to the housing shortage in the area where they are applied. B. are used in a government kickback scheme. C. actually contribute to the housing boom in an area where they are applied. D. have no effect on the local housing market.