Consider the following demand table and the graph.Demand TablePriceQuantity demanded per week$5.00100$4.00150$3.00200$2.00250
Which of the demand curves best reflects the demand table?
A. A
B. B
C. C
D. D
Answer: C
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If consumers spend their money only on beef and vegetables, then the substitution effect of an increase in the price of beef would result in consuming ________ beef and ________ vegetables
A) more; more B) less; fewer C) more; fewer D) less; more
Suppose the price of crude oil drops from $150 a barrel to $120 a barrel. The quantity bought remains unchanged at 100 barrels. The coefficient of price elasticity of demand in this example would be
A) -0.5. B) infinity. C) -1.0. D) 0.
Tom produces commemorative t-shirts in a competitive market. If Tom decides to decrease his output, this will a. increase his revenue, since the output decrease leads to a higher market price
b. increase his revenue, since Tom's competitors will also decrease their output, so that price rises to offset the drop in Tom's output. c. decrease his revenue, since his output has decreased and the price remains the same. d. decrease his revenue, since the price does not rise sufficiently when output drops to offset the drop in Tom's output.
Automatic stabilizers are government programs that:
A. exaggerate the ups and downs in aggregate demand without legislative action. B. bring expenditures and revenues automatically into balance without legislative action. C. shift the budget toward a deficit when the economy slows but shift it toward a surplus during an expansion. D. increase tax collections automatically during a recession.