When the absolute price elasticity of demand equals 1, demand is
A. elastic.
B. unit-elastic.
C. inelastic.
D. undetermined without more information.
Answer: B
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If a tax cut of $12 billion causes real GDP to increase by $36 billion, then the tax multiplier is
A. 2. B. 3. C. 4. D. 5.
In the figure above, if the firm is regulated using a marginal cost pricing rule, the consumer surplus created is equal to the area of
A) ABG. B) ACF. C) BCFG. D) BCE. E) None of the above because there is no consumer surplus created.
Joe's income is $500, the price of food (F) is $2 per unit, and the price of shelter (S) is $100. Which of the following represents his budget constraint?
A) 500 = 2F + 100S B) F = 250 - 50S C) S = 5 - .02F D) All of the above
Microeconomics is concerned with:
A. the aggregate or total levels of income, employment, and output. B. a detailed examination of specific economic units that make up the economic system. C. positive economics, but not normative economics. D. the establishing of an overall view of the operation of the economic system.