Because demand curves slope downward according to the Law of Demand, the price elasticity of demand is a negative number
Indicate whether the statement is true or false
True . The price elasticity of demand measures the change in quantity demanded when a price change occurs. If price increases, the change in the quantity demanded will be negative.
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A small Caribbean island-country produces only pineapples and rum. If resources are used efficiently in the economy,
A. it will not be possible to produce more rum without decreasing the production of pineapples. B. it will be possible to produce more pineapples without decreasing the production of rum. C. it will be producing on its production possibilities curve. D. it will not be possible to produce more rum without decreasing the production of pineapples AND it will be producing on its production possibilities curve.
Vinny consumes tacos and chicken wings. To keep his utility constant, he must consume more tacos if he consumes fewer chicken wings. This means that
A) Vinny's indifference curve for tacos and chicken wings must have a negative slope. B) Vinny's marginal rate of substitution must be constant along his indifference curves for tacos and chicken wings. C) Vinny's marginal utility from each good must be constant along his convex indifference curves for tacos and chicken wings. D) the prices Vinny pays for tacos and chicken wings are always the same.
An exchange-rate system in which the nominal exchange rate is set by the government is known as
A) a flexible exchange-rate system. B) a floating exchange-rate system. C) a fixed exchange-rate system. D) an exchange-rate union.
Both the PIH and the LCH predict that
A) the sum of saving and consumer durable purchases should increase in relation to personal income in booms and fall in recessions. B) the sum of saving and consume nondurable purchases should increase in relation to personal income in booms and fall in recessions. C) the sum of saving and consumer durable purchases should decrease in relation to personal income in booms and increase in recessions. D) saving should increase in relation to personal income in booms and fall in recessions, but that consumer durables tend to behave in a more stable manner over a cycle.