"Price elasticity measures how many more units of a good that consumers will buy given a decrease in price." Do you agree or disagree? Explain
What will be an ideal response?
Disagree. Price elasticity measures the percentage change in quantity demanded in response to a percentage change in price. As such, the statement is not valid as the elasticity measure is unit free.
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Which of the following statements is true?
A) Normative statements depend on personal preferences. B) Normative economic statements can be confirmed or disproven. C) Positive economics recommends what people ought to do. D) Positive economics deals with issues that are subjective.
The argument that developing countries should nurture their infant domestic industries by protecting them from foreign competition is known as
A) the infant industry argument. B) the escape clause hypothesis. C) preservation of the home market. D) institutional fair trade policy.
What important lesson did American economists learn in the 1980s and again in 2001-2003?
a. Large tax cuts can lead to a balance of trade surplus. b. Large government budget deficits can crowd out consumption. c. Large government budget deficits can bankrupt the nation. d. Large government budget deficits can crowd out net exports.
When natural disasters, such as hurricanes on the U.S. Gulf Coast or an earthquake in Japan, disrupt supply chains and push up the costs of production, this may result in
A. Cost-push inflation. B. Wage-pull inflation. C. Labor-push inflation. D. Demand-pull inflation.