Refer to the figure above. Over the $5-$6 range, the elasticity of demand using the midpoint formula is:
A. 0.22.
B. 1.00.
C. 0.88.
D. 1.16.
Answer: B
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An example of financial capital is
A) bonds. B) computers. C) the talents of a highly paid movie star. D) machines. E) buildings.
According to the theory of rational expectations, expansionary fiscal policy that is anticipated will:
a. cause wage expectations to adjust downward immediately following the lower price level. b. increase the real wage rate in the long run. c. cause a permanent decline in the natural rate of unemployment. d. decrease the real wage rate in the long run. e. cause wage expectations to adjust upward immediately following the higher price level.
Tax distortions happen because tax laws take into consideration only:
A. nominal income. B. nominal output. C. real income. D. real output.
If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A. a negatively sloped straight line. B. negatively sloped and "bowed inward" toward the origin. C. negatively sloped and "bowed outward" from the origin. D. a positively sloped straight line.