The income elasticity of demand is calculated as the
A. percentage change in quantity demanded divided by the percentage change in income.
B. percentage change in quantity demanded multiplied by the percentage change in income.
C. percentage change in income divided y the percentage change in price.
D. percentage change in income divided by the percentage change in quantity demanded.
Answer: A
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Comparing Tobin's model of the speculative demand for money with Keynesian speculative demand
A) both models imply that individuals hold only money or only bonds. B) the Keynesian model implies individuals diversify their asset holdings, while the Tobin model predicts that individuals hold only money or only bonds. C) the Tobin model implies individuals diversify their asset holdings, while the Keynesian model predicts that individuals hold only money or only bonds. D) both models imply that individuals diversify their asset holdings.
The normal rate of return on equity capital is also known as
a. the explicit cost of capital. b. the marginal cost of capital. c. economic profit. d. the opportunity cost of capital.
Opportunity cost is
A) the combined value of all the alternatives not selected. B) the same thing as the money price of a good. C) the value of the next best alternative which was given up. D) based on the intrinsic value of the good itself.
When a monopolistically competitive firm lowers its price, one good thing happens to the firm. What is this "one good thing" called?
A) the output effect B) the price effect C) the income effect D) the substitution effect