Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?
a. 0.8
b. 1
c. 1.8
d. 2.4
a
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Consider the usual case where a higher wage rate increases firms' marginal costs. In this case, the industry's demand curve for labor
a. is more inelastic than the individual firms' demand curves would indicate. b. coincides with the horizontal sum of individual firms' demand curves. c. contains only substitution effects but no scale effects. d. is horizontal at the going market wage.
The real wealth effect explains that higher prices
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less b. make people worse off by reducing the value of their wealth, leading them to save less and spend more c. make people better off by increasing the value of their wealth, leading them to save less and spend more d. increase borrowing, leading to higher interest rates and less investment e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods
Which of the following is an example of a transfer payment?
a. wages paid to military personnel b. benefits paid to Social Security recipients c. purchase of aircraft by the Department of Defense d. payments made to a contractor for construction of a highway
Define GDP. Remember to be specific about what it includes