Suppose when the price of a cookie is $2.50, the quantity demanded is 50, and when the price is $1, the quantity demanded is 200. Using the midpoint method, the price elasticity of demand is:
A. -0.72
B. -7.2
C. -1.40
D. -140
Answer: C
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If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes
a. True b. False Indicate whether the statement is true or false
If the population and GDP increase by the same percentage, then real GDP per capita:
A. stays the same. B. increases. C. decreases. D. may change, but one cannot be sure of the direction.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.
A payroll tax is imposed on two types of labor: carpenters and laborers. In the short run, the elasticity of labor supply of carpenters is much less elastic than the elasticity of labor supply of laborers. Which of the following is true?
A. In the short run, laborers will bear a larger share of the payroll tax than carpenters. B. In the short run, carpenters and laborers will bear the same share of the payroll tax, but in the long run, laborers will bear a larger share of the payroll tax than carpenters. C. In the short run, carpenters will bear a larger share of the payroll tax than laborers. D. There is not enough information to determine the relative shares of the payroll tax for carpenters and laborers in either the short run or the long run.