If a price decrease of a product significantly raises its revenues, then the absolute price elasticity of demand for that product must be
A) less than one.
B) equal to one.
C) greater than one.
D) an example of unit elasticity.
C
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Under the Bretton Woods system
A) the United States was the only nation with floating exchange rates. B) all nations fixed the value of their currencies against the dollar. C) the United States was the only nation with a fixed exchange rate. D) all nations allowed the value of their currencies to be determined by the free market.
Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?
What will be an ideal response?
Losses are important to a competitive price-searcher market (industry) because they send a message to the market participants that
a. more resources should be devoted to a particular industry. b. resources can rise in value if diverted away from that particular industry. c. resources are allocated exactly as they should be. d. the firms should charge lower prices.
A speculative attack on a country with a fixed exchange rate occurs when:
A. financial market participants believe the government has a large excess of international reserves. B. financial market participants believe the government will have to devalue its currency. C. financial market participants believe the currency is undervalued. D. the country converts its gold reserves into foreign exchange.