Inventory depletion is a warning sign of
A. A drop in AS.
B. Deflation.
C. A drop in AD.
D. Inflation.
Answer: D
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Suppose the price of chocolate chip cookies is $4.00 per pound and the price of a slice of cake is $2.00 per slice. The relative price of cake in terms of cookies is
A) 1/2 pound of cookies per cake. B) 2 pounds of cookies per cake. C) 1/2 slice of cake per cookie. D) 2 slices of cake per cookie.
The substitution effect occurs because when the price of one good increases, consumers will buy fewer substitute goods
a. True b. False Indicate whether the statement is true or false
Coal produced by strip mining leaves the area that has been mined unusable. To restore the area to its original state costs approximately $10 for every ton mined. Using the coal to generate electricity causes air pollution. To outfit the electric power plant with pollution control devices costs another $10 per ton. The social cost of coal-fired electricity then includes
a. private cost plus the externality costs associated with mining b. private cost plus the externality costs associated with pollution control c. the externality costs associated with mining and pollution control d. private cost plus the externality costs associated with mining and pollution control e. just the private cost because the externality costs are incorporated in it
If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10 percent,
a. demand is elastic. b. demand is inelastic. c. elasticity of demand is unitary. d. None of the above is correct.