If consumer purchases of a good are highly sensitive to the price of the good, this is illustrated by a
a. demand curve that is relatively flat (more horizontal).
b. demand curve that is relatively steep (more vertical).
c. supply curve that is relatively flat (more horizontal).
d. supply curve that is relatively steep (more vertical).
a. demand curve that is relatively flat (more horizontal).
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If the economy is represented in the graph shown and is currently at point E2, what could be said about the state of the economy?
A. There is higher unemployment than the natural rate.
B. There is lower unemployment than the natural rate.
C. The unemployment rate is just about the natural rate.
D. The unemployment rate is zero.
Assume that the government is considering different policies to increase total expenditures in order to reduce unemployment. Which of the following would achieve this objective?
a. decreasing taxes b. increasing government spending c. increasing transfer payments d. All of the above are correct.
According to Coase, the efficient solution to an externality problem depends on which party can avoid the problem at the lower cost. Thus when property rights are assigned to one party or another, the two parties will agree on the efficient solution to an externality problem as long as transaction costs are low, regardless of which party is assigned the property right
Indicate whether the statement is true or false
Suppose the demand function for the Toyota Camry is given by Qd = 500 - 12PC + 10PH - 5PG + 0.0001M, where PC is the price of the Toyota Camry (in thousands), PH is the price of the Honda Accord (in thousands), PG is the price of gas (per gallon) and M is income. Further, suppose the supply curve for the Toyota Camry is given by Qs = 20PC - 55.
a. What is the demand curve for the Toyota Camry if the price of the Accord is $25,000, gas is $2 per gallon and income is $50,000? b. What is the equilibrium price and quantity in the market for Toyota Camrys? c. Is demand elastic or inelastic at the equilibrium price? d. What is the cross price elasticity of demand between Camrys and Accords at equilibrium? e. What is the income elasticity of demand for Camrys at equilibrium? What will be an ideal response?