If demand is elastic, a rise in price will decrease total expenditure.
Answer the following statement true (T) or false (F)
True
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Which of the following best characterizes the circular flow of income?
a. Households buy goods and services from businesses, and businesses sell goods and services to households. b. The government purchases resources from businesses and households and then sells goods and services to businesses and households. c. Businesses buy resources from the government, and households buy goods and services from businesses. d. Businesses buy resources from households, and households use their income to buy goods and services from businesses.
A useful theory must
A. apply to every conceivable situation. B. be broadly applicable. C. be agreed upon by all economists. D. not be able to be refined.
Suppose that electricity producers create a negative externality equal to $5 per unit. Further suppose that the government imposes a $5 per-unit tax on the producers. What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of electricity to be produced?
a. They are equal. b. The after-tax equilibrium quantity is greater than the socially optimal quantity. c. The after-tax equilibrium quantity is less than the socially optimal quantity. d. There is not enough information to answer the question.
What does the existence of labor unions mean for the labor market and for unemployment?
A. Unemployment could reach zero. B. Wage rates could fall below equilibrium level. C. Wage rates could rise above equilibrium level. D. Unemployment could grow to unsustainable levels.