As we move upward along a linear demand curve, the price elasticity of the demand:
A. increases.
B. decreases.
C. remains the same.
D. increases up to the midpoint and then decreases.
Answer: A
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Suppose you hear of a great deal on a used car and wonder, "Why is the price so low?" This might be an instance of ________
A) tyranny of collateral B) adverse selection C) the free rider problem D) moral hazard
In a proportional tax system each individual would pay the same percentage of his or her income in taxes
a. True b. False Indicate whether the statement is true or false
Average total cost is equal to
A. The sum of average variable cost and marginal cost. B. Total cost divided by quantity produced. C. Total cost divided by fixed cost. D. Total cost multiplied by quantity.