Suppose that the elasticity of demand for a product is 4.0 and quantity demanded increases by 20%. What must the percentage decrease in price have been?
A. 5%
B. 20%
C. 80%
D. 200%
Answer: A
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Suppose the demand in a certain duopoly market with homogenous goods is Qd = 8,000 - 100P. The two firms in the market are firm V and firm W, and the marginal cost of producing the goods in question is equal to $25. Which of the following describes the Nash equilibrium in this market?
A. PV = PW = $25 B. One of the firms charges a price higher than $25, and one of the firms charges a price lower than $25. C. PV = PW > $25 D. PV = PW < $25
When the free-rider problem exists,
a. the market will devote too few resources to the production of the good. b. the cost of the good will always be more than the benefit of the good. c. the good will not be produced. d. entrepreneurs will eventually find a way to make free-riders pay their share.
Bank A has checkable deposits of $900,000 and total reserves of $112,000. If the required reserve ratio is 8 percent, the bank has excess reserves of
A) $40,000. B) $72,000. C) $13,440. D) $4,000.
Explain whether you agree with the following statement: Some economists claim that the recession of 2007 - 2009 was caused by a decline in spending on residential construction. This can't be true. If there had just been a decline in spending on residential construction, the only firms hurt would have been home builders and firms selling lumber and other goods used in building houses. In fact, many firms experienced falling sales during that recession, including automobile, appliance, and furniture firms.
A. I agree - the decline in spending on residential construction can't be the cause of the recession B. I disagree - the commentator assumes that the multiplier is greater than zero C. I disagree - the commentator ignores the additional rounds of spending that make up the multiplier process