The following graph depicts demand. At point D, demand is:

A. unit elastic.
B. perfectly price elastic.
C. price elastic.
D. price inelastic.


Answer: D

Economics

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Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. In this case, the real after-tax interest rate is

A) 4.0 percent. B) .5 percent. C) 2.0 percent. D) 1.0 percent. E) 3.5 percent.

Economics

An increase in the price of a good

A. increases the incentive to buy the good, but decreases the incentive to sell the good. B. decreases the incentive to buy the good, but increases the incentive to sell the good. C. increases both the incentive to buy the good and the incentive to sell the good. D. decreases both the incentive to buy the good and the incentive to sell the good.

Economics

Which of the following is not a reason that the cost of owner-occupied housing is difficult to measure?

a) Housing is both an investment and consumption good b) Buying a house is a one-off expenditure, but the benefits of home ownership are spread over many years c) Owner-occupiers do not pay rent which is the most straightforward measure of the cost of housing d) House purchase, when it occurs, is too large a share of total spending e) Many countries do not have a well developed rental market from which to calculate imputed rents for owner occupiers

Economics

Refer to Scenario 9.8 below to answer the question(s) that follow. SCENARIO 9.8: Investors put up $1,040,000 to construct a building and purchase all equipment for a new gourmet cupcake bakery. The investors expect to earn a minimum return of 10 per cent on their investment. The bakery is open 52 weeks per year and sells 900 cupcakes per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The bakery charges $8 on average per cupcake.Refer to Scenario 9.8. If the bakery were to shut down, losses per week would be

A. $2,000. B. $3,600. C. $4,000. D. $7,200.

Economics