Compute the elasticity of demand for the demand curve p = 15Q-0.7. Does the elasticity vary with the price?
What will be an ideal response?
For constant elasticity demand as this, the elasticity is the same throughout the demand curve. E = -0.7
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As the wage rate falls, other things constant, perfectly competitive firms will employ
A) fewer workers. B) more capital. C) the same number of workers. D) more workers.
Ted has $600 a week to spend on clothing and food. The price of clothing is $30 and the price of food is $5. What is the equation for Ted's budget constraint, assuming he spends his entire budget?
A. $30 × Clothing + $5 × Food = $600 B. $30 × Clothing + $5 × Food > $600 C. $30 × Clothing + $5 × Food < $600 D. $30 × Clothing + $5 × Food ? $600
Suppose Smith's oil refinery and Jones' paper mill both pollute a river and both firms operate under a system of marketable pollution permits. If it costs Smith $45 to reduce pollution by 500 gallons per day, and Jones can reduce costs by $65 by increasing pollution by 500 units per day:
A. the firms cannot gain by trading the right to pollute. B. both firms can benefit if Smith trades the right to increase pollution by 500 gallons to Jones for $30. C. both firms can benefit if Smith trades the right to increase pollution by 500 gallons to Jones for $50. D. both firms can benefit if Jones trades the right to increase pollution by 500 gallons to Smith for $30.
Realization of gains from trade, entrepreneurial discovery, and investment are largely dependent on
a. competitive elections and political democracy. b. the presence of institutions and policies consistent with economic freedom. c. the use of tariffs and quotas to protect domestic businesses from competition with foreigners. d. the use of government planning to direct investments into worthwhile projects.