Suppose the residents of Metropolis travel to work either by bus or train. If the price of train tickets increases, then:
A. the demand for train tickets will decrease.
B. the demand for bus tickets will increase.
C. the demand for bus tickets will decrease.
D. the demand for train tickets will increase.
Answer: B
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Suppose a babysitter demands payment in full before the parents go out for the night. Using the economic way of thinking, the babysitter is clearly
A) exploiting the parents. B) exploiting the children. C) selling short. D) in it only for the money.
If the price elasticity is between 0 and 1, demand is
A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic.
An investor who bases the decision to buy an asset solely on the expected return of an asset is considered to be:
A) risk loving B) risk averse C) risk neutral D) risk avoiding
Corporations can finance their activities through the sale of new stocks but are legally prohibited from selling bonds.
Answer the following statement true (T) or false (F)