A 10 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand is
A) 3.
B) 0.33.
C) 0.5.
D) 2.
C
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Suppose the price elasticity of demand for a product is 1.3 . If a supplier wants to increase revenue, what change should it make to price, if any?
When the equilibrium dollar price of a foreign currency decreases due to changes in demand for or supply of the foreign currency, the foreign currency
A) has appreciated. B) has depreciated. C) is overvalued. D) is undervalued. E) is devalued.
The effects of the national health care program on labor markets will
A) lower the effective wage rate that they must pay for each unit of labor. B) decrease the marginal revenue product of labor. C) increase the marginal revenue product of labor. D) move upward along their downward-sloping marginal-product-of-labor curve.
According to prospect theory, firms are more likely to shrink packages than raise prices because:
A. consumers feel the loss of a price increase more than they feel the loss of buying a smaller package for their money. B. they don't understand that consumers recognize price increases easily, regardless of what form they take. C. consumers associate smaller packages with higher quality luxury goods. D. consumers are generally trying to downsize their purchases and lead simpler lives.