If the MPC is 0.80 and the government increases transfer payments by $45 billion, then the initial fiscal stimulus will equal
A. $36 billion.
B. $9 billion.
C. $225 billion.
D. $56.25 billion.
Answer: A
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Pricing to Competition When ShorTech introduced its Quadrant mobile phone, it had few competitors and so it set a price of $500 when its unit cost was $350 . The economics consulting firm it hired to estimate the demand elasticity confirmed this was the
optimal price. Since then, entry has occurred that make customers more price conscious. When it rehired the economics consulting firm to estimate the demand elasticity, it found that demand had become more elastic at -4 . Also, it eked out cost savings and now has a unit cost of $300 . What price should ShorTech charge now?
Money exchanges are more efficient than barter because:
a. money exchanges do not require a double coincidence of wants. b. the government guarantees the value of money. c. money usually has an intrinsic value. d. money is backed by a physical commodity. e. opportunity costs are higher with barter trades.
Which of the following about price discrimination is true?
a. A price-discriminating seller will charge consumers with an elastic demand a lower price than consumers with an inelastic demand. b. A firm must face a horizontal demand curve for its product in order to engage in effective price discrimination in a market. c. Price discrimination always harms consumers and helps sellers in the short run but in the long run, consumers benefit at the expense of sellers. d. A seller must have a monopoly in order to gain from price discrimination.
Scarcity results when available resources cannot satisfy all desired uses of those resources.
Answer the following statement true (T) or false (F)