An economist estimates the elasticity of demand for baseball tickets to be 0.23. Using this information, a club that wants to raise revenues should:
A. lower ticket prices.
B. increase ticket prices.
C. raise the prices of other goods sold at games.
D. leave ticket prices unchanged, because it is maximizing revenue.
Answer: B
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What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?
What will be an ideal response?
The first example used to explain comparative advantage used two countries (England and Portugal) and two goods (wine and cloth) to show that
A) each country would be better off from trade if it had an absolute advantage in producing one of the goods. B) each country would have a comparative advantage in the production of the good for which it had an absolute advantage. C) mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods. D) mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods.
In a labor-market pooling equilibrium with high-skill and low-skill workers and where a costly educational degree is used as a signaling device, all else equal, an increase in the wage differential between high- and low-skill workers leads to
A) an increase in the required minimum share of high-skill workers. B) a decrease in the required minimum share of high-skill workers. C) no change in the required minimum share of high-skill workers. D) None of the above answers are correct.
The 1920s were characterized by large numbers of bank failures each year, especially among country banks. Country banks were particularly inclined to fail because:
a. they tended to open too many branches. b. they were not allowed to issue checking accounts. c. they were not allowed to join the Federal Reserve system. d. farm mortgages constituted the major portion of their loans. e. All of the above.