Assume the Cookie Monster, who eats only cookies, has an income of $200 a week and that the price of a cookie is $2. If the price doubles, he cuts his consumption in half. How much is his elasticity of demand for cookies?
What will be an ideal response?
1 (unit elasticity)
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What four conditions define a perfectly competitive market?
What will be an ideal response?
Discuss the meaning of the phrase of supply-side economics, discussing how it is similar and different from the traditional classical model. Make sure to discuss the role of the Laffer curve in supply-side theory
What will be an ideal response?
Refer to above figure, which represents a duopoly industry. What would be the likely total industry payoff or profit?
A) $8 million B) $9 million C) $10 million D) $14 million E) zero
How sensitive is the structural deficit to the state of the economy?
A. It is insensitive to the state of the economy. B. The structural deficit changes cyclically with the economy. C. Changes in the structural deficit trigger opposite swings in the economy. D. The structural deficit changes countercyclically with the economy.