Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?
A) The price elasticity of demand can be used to determine the impact of changes in income on quantity sold.
B) Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change.
C) Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit.
D) The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.
Answer: D
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A) increase government spending. B) increase taxes. C) increase interest rates. D) use expansionary fiscal policy.
A decline in the desired level of capital and investment will result from ________
A) a rise in the real price of capital B) a decrease in the rate of depreciation C) a decrease in the real interest rate D) a decrease in the real price of capital
If Boliva's terms of trade changes from 1.00 to 1.20, it implies that
a. Bolivia is exporting more than it's importing b. Bolivia is importing more than it's exporting c. Bolivia's export prices have risen relative to its import prices d. Bolivia has lost the comparative advantage in the production of goods e. Bolivia now has an absolute advantage in the production of goods
The underlying reason large taxes create small revenues is ______.
a. a decrease in quantity exchanged b. a maximization of efficiency c. a gain in consumer surplus d. an inability for supply to meet demand