Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250 . What is Jim's own price elasticity of demand?
a. 1.29
b. 1
c. 0.25
d. 0.78
a
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The Fed is concerned about inflation. Its policy will ________ U.S. short-term interest rates and, in the foreign exchange market, lead to the value of the U.S. dollar ________
A) lower; rising B) lower; not changing C) raise; rising D) lower; falling E) raise; not changing
Louise Bakery sells cupcakes that have an equilibrium price of $5.00 per cupcake and an equilibrium output of 300 cupcakes. Which of the following is likely to be true when the government imposes a tax of $0.75 per cupcake? a. Producer and consumer surplus will increase. b. Producer and consumer surplus will decline. c. Equilibrium price will decrease
d. Equilibrium output will increase.
Let: (1 ) Pt be the price of one unit of a market basket of goods (i.e., a composite commodity) in year t; (2 ) Pet+1 be the expected price of one unit of a market basket of goods in year t + 1; (3 ) ?et+1 be the expected rate of inflation between period t and t + 1; and (4 ) it be the one-year nominal interest rate. Suppose an individual borrows the equivalent of one unit of a composite
commodity today. Given this information, which of the following expressions represents (i.e., is equal to) the amount of the composite commodity one must repay in one year? A) (1 + it)(Pet+1)/(Pt) B) (1 + ?et+1)/(1 + it) C) {(1 + ?et+1)/(1 + it)} - 1 D) {(1 + it)(Pt)/(Pet+1)} - 1 E) none of the above
Refer to the graphs below. Assume that the economy is initially at equilibrium where AD2 and AS intersect in Graph 1, and also assume that the economy is initially at point C in Graph 2. If the government implements contractionary or restrictive policy, it would make the economy in graph 2 to:
A. Move from point C to point B
B. Move from point C to point A
C. Move from point C to point D
D. Remain at point C