John argues that when the price of a good decreases, people will purchase less of the good. This statement is
A) consistent with the law of demand.
B) inconsistent with the law of demand.
C) referring to money prices.
D) consistent with the law of supply.
Answer: B
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Robert left a law firm to begin his own catering business. Robert’s salary at the law firm was $100,000. He put $40,000 of his own funds into the business to purchase cooking equipment. His funds were previously earning 10 percent per year. The cost of operating the business including food and supplies was $60,000. Robert’s catering firm earned $170,000 in revenues for the first year. Robert’s brother insists that he should go back to the law firm, since he was making $100,000 there. Robert says his brother is wrong. Robert is right because
A. he is making $6,000 in economic profits. B. he is making $110,000 in accounting profits. C. he is making $106,000 in economic profits. D. he likes cooking.
In the above figure, the inflationary gap can correctly be identified as
A) the difference between 125 and 120. B) the difference between 12.2 trillion and 12 trillion. C) LRAS minus SRAS. D) AD1.
\Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400 million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:
a. elastic. b. inelastic. c. unitary elastic. d. perfectly elastic. e. perfectly inelastic.
At a price of $4, quantity supplied is 120, and at a price of $10, quantity supplied is 300. Using the midpoint formula, the price elasticity of supply is ________ and supply is ________.
A. 1; unit elastic B. 0.40; inelastic C. 2.5; elastic D. 0.1; inelastic