Assume that when the price of good X is $12, quantity demanded is 32. When price is decreased to $9, quantity demanded increases to 45. Over this range, the arc elasticity of demand is 1.182
Indicate whether the statement is true or false
TRUE
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According to the Ricardian equivalence theorem, a tax cut that increases the government budget deficit will have
A) a positive effect on aggregate demand because people look at changes in taxes or government spending in the present. B) no effect on aggregate demand because people only look at changes in taxes or government spending in the present. C) no effect on aggregate demand because people realize that there will be a future tax liability so that there is no increase in consumption expenditures. D) an effect on aggregate demand. The magnitude the effect will have depends upon whether the increase is caused by a reduction in taxes or an increase in government spending.
What would be an example of a consumption service?
A) Jake buys an iPhone. B) The local driver's license office purchases a new digital camera and printer. C) Rhianna gets a haircut. D) Donald Trump purchases furniture for his office. E) Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?
A) if the total revenue exceeds the total fixed cost B) if the total revenue exceeds the total variable cost C) if the total revenue is positive D) if the total revenue is increasing E) if the marginal revenue exceeds the price.
The present value of $1 payable in the future decreases:
a. the higher r is and the sooner it is to be paid. b. the lower r is and the sooner it is to be paid. c. the higher r is and the longer time until it is paid. d. the lower r is and the longer time until it is paid.