Which event is most likely to increase the elasticity of demand for a good?
A) A decrease in the demand for the good
B) A decrease in the price of the good
C) An increase in the demand for the good
D) Higher incomes for consumers of the good
E) The appearance on the market of excellent substitutes for the good
E
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Consumers have to make tradeoffs in deciding what to consume because
A) there are not enough of all goods produced. B) the prices of goods vary. C) not all goods give them the same amount of satisfaction. D) they are limited by a budget constraint.
Assume the U.S. government wants to hold the value of the dollar at $1.00 U.S. equals 10 Chinese yuan, but it finds that the value of yuan is depreciating against the U.S. dollar. What would be an appropriate policy to reverse this trend?
A) Increase government spending within the U.S. B) Buy U.S. dollars. C) Sell U.S. dollars. D) Increase the money supply in the U.S.
If there is an increase in income, which of the following is true?
a. The demand for complementary goods decreases. b. The demand for substitute goods decreases. c. The demand for normal goods decreases. d. The demand for normal goods increases. e. The supply for all goods decreases.
Unemployment that is of a short duration to allow a person time to find a new job is