The price elasticity of demand equals 1:
A. whenever the slope of a straight-line demand curve equals zero.
B. at the midpoint of a straight-line demand curve.
C. whenever the slope of a straight-line demand curve is greater than 1 in absolute value.
D. whenever the slope of a straight-line demand curve is less than 1 in absolute value.
Answer: B
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Sarah spends $100 a year on magazines and ice cream. The table above shows her utility from each good. If the price of a magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend the $100?
What will be an ideal response?
A decrease in expected inflation
A) usually leads to falling nominal interest rates. B) results in increased nominal capital gains on physical assets. C) will shift the bond demand curve to the left. D) will shift the supply curve for loanable funds to the left.
The present value of $1 received 1 year from now, given the current interest rate of 7%, is about
A. $.90. B. $.91. C. $.93. D. $1.00.
If the value of the price elasticity of demand is 0.2, this means that:
A. a 20 percent decrease in price causes a 1 percent increase in quantity demanded. B. a 0.2 percent decrease in price causes a 1 percent increase in quantity demanded. C. a 5 percent decrease in price causes a 1 percent increase in quantity demanded. D. a 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded.