Which of the following is true?
A. On a linear demand curve, elasticity is constant.
B. At the same price, demand is less elastic on the steeper demand curve.
C. On a linear demand curve, the higher the price, the less elastic is demand.
D. All are true.
Answer: B
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If a regulatory commission sets the regulated price equal to marginal cost for a natural monopoly:
a. losses will result. b. government subsidies will be unnecessary. c. the firm will earn economic profits. d. new firms will want to enter. e. resource use will not be optimal.
A $500 increase in investment will shift the aggregate expenditures curve up by:
a. exactly $500 and will increase the equilibrium level of real GDP by exactly $500. b. exactly $500 and will increase the equilibrium level of real GDP by less than $500. c. exactly $500 and will increase the equilibrium level of real GDP by more than $500. d. more than $500 and will increase the equilibrium level of real GDP by more than $500. e. less than $500 and will increase the equilibrium level of real GDP by less than $500.
In Figure 1 above the Keynesian equilibrium occurs at what output level?
A. Y2 B. Y3 C. Y1 D. it does not occur at any output level in the graph.
Attempts to reduce income inequality may lead to greater income inequality.
Answer the following statement true (T) or false (F)