The cross-price elasticity of demand refers to:
A. the substitution of one good for another as the prices of two goods change.
B. a change in the demanded for two goods, following a change in the price of one good.
C. the value of price elasticity at which supply crosses demand.
D. the percentage change in the quantity demanded of one good resulting from a 1-percent increase in the price of another good.
D. the percentage change in the quantity demanded of one good resulting from a 1-percent increase in the price of another good.
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According to the income effect, an increase in the price of oranges will: a. cause consumers to consume more apples because of greater savings on that good
b. cause consumers to spend more on oranges because a higher price signals that oranges are better than apples. c. cause consumers to replace some oranges with other fruit that is now relatively cheaper than oranges. d. leave consumers with less real income to spend on all goods.
In a perfectly competitive market, if the market price is less than ATC, and the market price equals the MC, then the firm should:
A.) Result in an increase in profits B.) Result in a loss of income C.) Result in a growth of the industry D.) Result in more sellers entering the market
According to the Taylor rule, if there is a recessionary gap of 2 percent of potential output and inflation is 4 percent, what real interest rate will the Fed set?
A. 0.015 B. 0.025 C. 0.03 D. 0.02
Which of the following is a justification for transfer payments?
a) transfers can create a more ethically acceptable income distribution b) income redistribution provides insurance against misfortune c) poverty creates negative externalities such as crime and disease d) myopic individuals make time-inconsistent saving decisions e) all of the above