Suppose a 10% increase in the price of aspirin leads to a 5% decrease in the quantity demanded of aspirin. The demand for aspirin, therefore, is
A. unit elastic.
B. perfectly inelastic
C. inelastic.
D. elastic.
Answer: C
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In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?
A) Price controls must be applied by governments. B) Relative prices must be able to adjust to market clearing levels. C) Tastes and preferences of consumers must adjust to eliminate surpluses or shortages. D) Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages.
The building of the ________ were the key development in opening the era of mass production and mass consumption.
Fill in the blank(s) with the appropriate word(s).
Figure 18-2
Figure 18-2 shows the widget market before and after an excise tax is imposed. The tax per widget equals ____.
A. $5 B. $20 C. $25 D. $30
Equilibrium GDP on the demand side occurs when total spending
A. equals total production, and inventories are zero. B. equals total production, and firms are unable to adjust inventories. C. exceeds total production, and inventories are rising. D. equals total production, and inventories remain at desired levels. E. is less than total production, and inventories are falling.