You are the manager of a popular shoe company. You know that the advertising elasticity of demand for your product is 0.15. How much will you have to increase advertising in order to increase demand by 10 percent?
A. 38.6 percent
B. 66.7 percent
C. 4.3 percent
D. 0.02 percent
Answer: B
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
As more people in a country started hoarding grains in fear of a shortage, a shortage actually occurred. This is an example of a(n) ________
A) positive externality B) information cascade C) moral hazard D) adverse selection
A young college graduate is earning $30,000 per year and would like to borrow $20,000 more for a down payment on a house, but is prevented from doing so by a "liquidity constraint"
For her, transitory income is likely to be ________ in its entirety, producing an MPC out of transitory income ________ that predicted by the LCH. A) consumed, below B) consumed, above C) saved, below D) saved, above
Assuming the market is in equilibrium in the graph shown with demand D and supply S2 at a quantity of 8, producer surplus is:
A. 28
B. less than the consumer surplus.
C. 16
D. $32.