A positive temporary supply side shock will:
A. increase the level of potential output in the long run.
B. decrease the price level in the long run.
C. increase the price level in the long run.
D. have no effect in the long run.
Answer: D
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If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________
A) 0.33 B) 0 C) negative D) 3.00
Suppose a group of people read an article on capital punishment. Prior to reading the article, 60% of the members of the group were opposed to capital punishment, while 40% of the members of the group were in favor of capital punishment. According to studies of human decision-making, which of the following is likely?
a. After reading the article, all members of the group oppose capital punishment. b. After reading the article, all members of the group are in favor of capital punishment. c. After reading the article, 60% of the members of the group are opposed and 40% of the members of the group are in favor of capital punishment. d. The members of the group would elect a representative in favor of capital punishment.
Assume that the supply curve is horizontal because marginal cost is constant at $10. John, Robert, and Jimmy each value one compact disc at $20 but only Jimmy and John value a second compact disc (Jimmy at $5 and John at $15). The maximum possible value achieved in this market is
a. $35. b. $60. c. $75. d. $80.
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What will be an ideal response?