If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign), then a 50 percent increase in the price of smart watches will lead to
A. the sale of 200 additional smart watches.
B. the sale of 125 percent fewer smart watches than before.
C. the sale of 70 percent fewer smart watches than before.
D. the sale of 25 percent fewer smart watches than before.
Answer: C
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In the above figure, the best affordable point is
A) 8 hamburgers and 0 magazines. B) 0 hamburgers and 6 magazines. C) 4 hamburgers and 3 magazines. D) some combination that is not given above.
All of the following illustrate how government can correct for positive externalities EXCEPT
A) subsidies. B) regulation. C) government financing and production. D) charging effluent fees.
If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is
a. 0.5. b. 1.0. c. 2.0. d. Not enough information is given to answer this question.
The "invisible hand" using Adam Smith's terminology refers to:
a. "behind-the-scenes" policy making to influence how markets allocate scarce resources. b. market forces working through the price mechanism. c. the money supply that serves to keep the economy working smoothly. d. government control of the market. e. the role of innovation in maintaining a steady rate of growth.