Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor. If I wanted to buy a mystery
novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?
A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel.
B) She is correct.
C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel.
D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards.
Answer: B
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If, as your taxable income increases, you pay a smaller percentage of your taxable income in taxes, then the tax is
A) progressive. B) regressive. C) proportional. D) unfair.
An unregulated monopoly will
A) flood the market with goods to deter entry. B) produce only where marginal revenue is zero. C) produce in the inelastic range of its demand curve. D) produce in the elastic range of its demand curve.
The investment rate is the percentage of total output allocated to
A. The production of new plants, equipment, and structures. B. Education and training for the workforce. C. Consumer retirement accounts. D. Saving.
Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking: (check all that apply)
a. economic generalizations. b. the law of supply. c. the other-things-equal assumption. d. ceteris paribus. e. marginal analysis.