When the price of milk is $3 per bottle, Steve purchases 20 bottles of milk. When the price increases to $6, Steve's consumption falls to 15 bottles. Steve's arc elasticity of demand for milk is:
A) -0.25.
B) -0.43.
C) -0.50.
D) -0.75.
B
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Refer to Game Matrix II. When would the upper left-hand corner be the likely outcome of this game?
Game Matrix II
The following questions refer to the game matrix below. Player A can play the strategies "High" and "Low," and Player B can play the strategies "Odd" and "Even."
a. When the game is played sequentially, with A being the first player.
b. When the game is played sequentially, with B being the first player.
c. When the players choose their strategies simultaneously.
d. The upper left-hand corner would never be the likely outcome, because the upper right-hand corner makes both player better off.
Purchasing power parity suggests that the exchange rate between two currencies reflects differences in the overall price levels in the two countries
Indicate whether the statement is true or false
Which of the following factors is NOT part of the budget equation?
A) relative prices B) real income C) quantities of goods D) preferences
According to the classical dichotomy, which of these magnitudes is affected by monetary policy?
A. the price level B. the real wage C. the real interest rate D. the rate of growth of real GDP