If the price of jelly increases 10 percent and the amount of peanut butter purchased decreases 20 percent, then the cross-price elasticity of these goods is:
A. 2.
B. 5.
C. - 2.
D. 0.5.
Answer: C
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Do markets solve all of society's problems?
a. Yes, markets are efficient and work well under nearly all circumstances. b. Yes, markets solve the problems of production and distribution. c. No, they do not solve problems such as unemployment and inflation. d. No, they hardly solve any problems at all. e. Uncertain, economic theory has no answer to this question.
Change in quantity of demand vs. Change in demand
What will be an ideal response?
In the AS/AD model, as the price level falls, the holders of money become richer and buy more. This is one reason why the aggregate demand curve is downward sloping.
Answer the following statement true (T) or false (F)
To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure
A) only if the demand was more elastic. B) only if the demand was more inelastic. C) only if the supply was more elastic. D) if either the demand was more inelastic or the supply more elastic.