Suppose that in a month the price of a cup of coffee increases from $1 to $1.50. At the same time, the quantity of cups of coffee demanded decreases from 200 to 190. The price elasticity of demand for cups of coffee (calculated using the midpoint formula) is approximately:
A. 0.13.
B. 0.5.
C. 7.8.
D. 20.
Answer: A
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To explore the rationale for specialization, economists use the
A) real-nominal principle. B) principle of opportunity cost. C) marginal principle. D) principle of marginal exchange.
The price of a house in Year 1 was $50,000. If the price index for Year 1 is 101, and for Year 2 is 202, the value of the house in Year 2 is ________.
A) $55,000 B) $100,000 C) $150,000 D) $75,000
Refer to the table above. Which of the following statements is true of the monopolist's total revenue?
A) As the monopolist reduces the price of its product from $9 to $3, its total revenue decreases. B) As the monopolist reduces the price of its product from $9 to $3, its total revenue increases. C) As the monopolist reduces the price of its product from $9 to $3, its total revenue increases then decreases. D) As the monopolist reduces the price of its product from $9 to $3, its total revenue decreases then increases.
Consider the two economies of Lithasia and Barylia. Economic agents in Lithasia have coordination and incentive problems, while in Barylia social surplus is maximized
Which economic system does each of these economies most likely have? Explain your answer.