Which of the following statements about demand and price elasticity of demand is TRUE?
A. As the demand curve has a positive slope, the price elasticity of demand is positive.
B. As the demand curve has a positive slope, the price elasticity of demand is negative.
C. As the demand curve has a negative slope, the price elasticity of demand is negative.
D. As the demand curve has a negative slope, the price elasticity of demand is positive.
Answer: C
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An industry is made up of 8 firms with the following percent market shares: 29, 20, 11, 10, 9, 8, 7, 6. The firms with 8 and 7 percent market share are proposing to merge. What is the new Herfindahl-Hirschman index if the merger takes place?
A) 225 B) 1462 C) 1692 D) 1804
A new technology is developed for producing microwave ovens that reduces production costs by 10%. Which of the following is the most likely consequence of this technological change?
A. Firms will continue to operate efficiently as long as no firm adopts this new technology. B. Firms must adopt this new technology to remain efficient. C. If firms do not adopt this new technology, then the economy will remain in general equilibrium, because firms will not change their price and output decisions. D. This new technology will not affect efficiency, but it will change the equilibrium price and quantity for this industry.
The intertemporal tradeoff between present and future consumption is measured by the
A) real interest rate. B) inflation rate. C) nominal interest rate. D) terms of trade. E) rate of economic growth.
If the Fed reduces the money supply, banks will often initially have
a. more reserves than they are required to hold b. excess reserves c. increased demand deposits d. fewer loans than normal e. deficient reserves