A value of the absolute price elasticity of demand equal to 0.4 indicates that
A. a 4 percent increase in price leads to a 10 percent decrease in quantity demanded.
B. a 1 percent increase in price leads to a 4 percent decrease in quantity demanded.
C. a 0.4 percent increase in price leads to a 1 percent decrease in quantity demanded.
D. a 10 percent increase in price leads to a 4 percent decrease in quantity demanded.
Answer: D
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A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
During a recession, the average duration of unemployment tends to
A) be unpredictable. B) be about the same as during an expansion. C) decrease. D) increase. E) remain constant.
A difference between a share of stock in a corporation and a corporate bond is that
A. the bond owner is entitled to receive a fixed annual coupon payment plus a lump-sum payment at the bond's maturity date, whereas the stockholder is entitled to a share of future profits. B. stocks are issued in return for funds that are lent to the corporation. C. the share of stock is a legal claim while the bond is not. D. the bond owner has voting rights within the corporation whereas the stockholder does not.
________ states that under certain conditions, private parties can arrive at an efficient solution without government involvement.
A. The Tiebout hypothesis B. The free-rider hypothesis C. The Coase theorem D. The impossibility theorem