Optimal price regulation sets price equal to
A) marginal cost.
B) average variable cost.
C) average cost.
D) minimum average cost.
A
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Suppose the quantity of money and real GDP do not change. If velocity increases, then the
A) price level will fall. B) price level will rise. C) inflation rate will fall. D) real interest rate will fall. E) real interest rate will rise.
Suppose you spent your entire budget on goods so that the marginal utility per dollar spent on each is identical. Which of the following is true? a. Your purchases are not efficient because there is no reason why you should buy the same quantity of each
b. You can increase your total utility by shifting income from low marginal utility generating goods to higher marginal utility generating ones. c. You will reduce your total utility if you allocate income in any other way. d. You are minimizing your marginal utility this way, which is what you want. e. You can avoid diminishing marginal utility.
A 2 percent increase in the price of shoes leads to a 5 percent decrease in the quantity demanded of shoes. The absolute price elasticity of demand is
A. 2.5. B. 0.2. C. 1. D. 0.4.
Which of the following causes the quantity of money demanded to increase?
A. an increase in nominal income B. a decrease in the price level C. a decrease in the interest rate D. a decrease in nominal income