If the price of a DVD decreases by 50 percent, the quantity demanded increases by 75 percent. The price elasticity of demand is:
A. -0.67 and is elastic.
B. -0.67 and is inelastic.
C. -1.5 and is inelastic.
D. -1.5 and is elastic.
Answer: D
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Under conditions of perfect competition, maximum profit or minimum loss occurs at the point where
a. AR = ATC. b. MR = AR. c. AR = MC. d. AVC = ATC.
Long-run economic profits are possible in which of the following market structures?
A. Oligopoly and monopoly B. Monopolistic competition C. Perfect competition D. Only monopoly
The government decides to reduce its expenditure by $250. The multiplier in this economy is 4 and the tax rate is 22 percent. The net effect of this contractionary fiscal policy is to:
A. decrease the budget deficit by $30. B. increase the budget deficit by $30. C. decrease the budget deficit by $220. D. increase the budget deficit by $220.
A key difference between import quotas and voluntary export restraints (VERs) is that the:
A. Domestic government administers the former, whereas the foreign government administers the latter B. Foreign government administers the former, whereas the domestic government administers the latter C. One is a tax, whereas the other is a quantity limit D. One raises the price of the imported product involved, whereas the other one does not