Suppose an increase in price decreases quantity demanded from 210 to 190. Using the mid-point formula, the percentage change in quantity demanded is:
A. 0.2 = 20 percent.
B. - 0.2 = - 20 percent.
C. - 0.1 = -10 percent
D. 2 = 200 percent.
Answer: C
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Assume you are working at a department store and you are told by the manager to cut prices by 20% for all the new women's sweaters that are currently priced at $50
What will be the new price of these sweaters? Suppose the manager tells you to raise the prices back up by 20%. What is the new price of the sweaters? Why is your answer not the same as the original price of the sweaters? What importance does this have for why the midpoint formula is used in calculating price elasticity?
Assume the four major grocery stores in a large metropolitan area decide to meet secretly to fix prices for meat. It would be easiest to maintain this arrangement when:
A) the number of additional competitors is very small. B) the cost conditions for the four firms differ substantially. C) individual firms are able to offer secret price discounts to selected buyers. D) demand for meat and fresh vegetables is falling.
Helga owns Viking, Inc, started with her $100,000 inheritance. Helga's accountant informs her that her firm earned a profit of $100,000 last year, and that if she chooses to invest the money she can expect a 10% return. If Helga did not run Viking, she would not work. What were Helga's economic profits last year?
a. Zero b. $100,000 c. $90,000 d. $95,000
Which of the following factors affects the marginal productivity of a worker?
a. human capital b. the worker's disposable income c. compensating wage differentials d. discrimination based on age, race, or gender