Which statement about price elasticity of demand along a linear demand curve is true?
a. As the quantity demanded increases, so does the buyer's sensitivity to price.
b. When price elasticity of demand is equal to 1, consumers are indifferent to subtle price changes.
c. The ratio of current price to quantity demanded is a good estimate of the elasticity of demand.
d. As the prices of goods increase, the elasticity of demand increases.
e. When an individual buys 4 units of a good his/her elasticity of demand for each unit increases.
d
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If the firms hires 5 workers, the average variable costs equals
a. $200 b. $50 c. $80 d. $40
Which of the following is not an example of an adverse selection problem?
a. A homeowner purchases a refrigerator that the seller knows has a history of leaking. b. A highly productive worker quits her job after a salary cut knowing that she can make more at a different job. c. A major league baseball player performs poorly in his second season after signing a multi-million dollar contract. d. A contractor uses low quality materials for construction but charges for higher quality materials.
Refer to Table 2.1. You can spend $40 on going to the movies or eating at a restaurant, or both. What is the opportunity cost of spending all your money at the restaurant?
Table 2.1 Item A B C D E Movie $0 $10 $20 $30 $40 Restaurant $40 $30 $20 $10 $0 a. $0 b. $10 c. $20 d. $30 e. $40
Economic policy may be inappropriate when it takes effect for all of the following reasons except
A. anticipation lags. B. recognition lags. C. implementation lags. D. response lags.