At a price of $8 per dozen, Chuy sells 40 dozen homemade tamales per week. When he raised his price to $12 per dozen, he still sold 40 dozen per week. Based on this information, the demand for his tamales is
A) perfectly elastic.
B) inelastic.
C) perfectly inelastic.
D) unit elastic.
Answer: C
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A bond will pay $10,000 to its owner in 5 years. If the relevant annual interest rate is 5%, what is the bond worth today (rounded to the nearest 100)?
A. $9,500 B. $7,800 C. $6,600 D. $1,900 E. None of the above.
Refer to Figure 14.3. Suppose the economy is initially at long-run equilibrium and the Fed increases the target inflation rate, and to hit this rate, it must reduce the real interest rate. The economy then reaches a new, short-run equilibrium point
Assuming expectations are adaptive, the next movement is best represented as a movement from A) point C to point B. B) point C to point A. C) point D to point C. D) point B to point C.
If the marginal cost of the 5,000th unit is $0.06 and the average total cost of the 5,000th unit is $0.10:
A. total cost is falling. B. average variable cost is falling. C. average total cost is falling. D. average fixed cost is rising.
Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that
A) people are rational. B) people respond to economic incentives. C) optimal decisions are made at the margin. D) equity is more important than efficiency.