If consumers can easily switch to a close substitute when the price of a good increases, demand for that good is likely to be:
A. inelastic.
B. elastic.
C. unit elastic.
D. perfectly inelastic.
Answer: B
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If a person's compensated demand (or MWTP) curve is perfectly vertical, the good is borderline between regular inferior and Giffen for this consumer.
Answer the following statement true (T) or false (F)
Assume that as the price of wheat falls from $10 to $8, the quantity demanded of wheat increases from 100 bushels to 150 bushels. This implies the price elasticity of demand for wheat is 0.5
a. True b. False Indicate whether the statement is true or false
Critics of active monetary and fiscal policy emphasize
a. that policy affects the economy with a lag and our ability to forecast future economic conditions is poor. b. "leaning against the wind" of economic change to stabilize the economy. c. cutting government spending, raising taxes, and reducing the money supply when aggregate demand is excessive. d. boosting government spending, lowering taxes, and increasing the money supply when aggregate demand is low.
Unlimited liability is found in
A. partnerships and corporations. B. proprietorships and corporations. C. proprietorships and partnerships. D. proprietorships, partnerships, and corporations.