Demand is inelastic only if the price elasticity of demand has an absolute value:
A. less than 0.
B. greater than 5.
C. of 1.
D. greater than 0 but less than 1.
E. greater than 1.
Answer: D. greater than 0 but less than 1.
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In the Keynesian model, a firm's high menu costs cause
A) real-wage rigidity. B) full employment. C) price stickiness. D) efficiency wages.
The monopolist's input demand curve is the
A) marginal revenue curve. B) marginal revenue product curve. C) marginal physical product curve. D) marginal factor cost.
Social Security payroll taxes are
A. proportional with a rate of 7.65 percent. B. indirect taxes. C. progressive because total taxes increase with income. D. regressive because the tax is not applied after reaching an income threshold.
Refer to the above graphs. A price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units. Which graph best illustrates the price elasticity of demand for this good?
A. Graph A B. Graph B C. Graph C D. Graph D