If the absolute price elasticity of demand is 0.2, a 5 percent decrease in the price will cause
A) the quantity demanded to increase by 1 percent.
B) the quantity demanded to increase by 10 percent.
C) the quantity demanded to increase by 0.25 percent.
D) the quantity demanded to increase by 2.5 percent.
Answer: A
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The U.S. Postal Service has a monopoly over first-class mail service because
A) the government has granted this agency a public franchise. B) stamps are copyrighted. C) stamps are trademarked. D) stamps are patented. E) it owns a vital resource, namely all mailboxes.
Consider two individuals, Wendy and Jenny, who discount delayed utilities with a weight of 1/4 and 7/8, respectively. Consuming one hamburger gives both Wendy and Jenny benefits worth 16 utils instantly and has delayed costs of 20 utils
a) If the nearby hamburger shop is closed for a week, comment on whether both individuals will consume hamburgers after a week. b) If a new shop is opened nearby, and hamburgers are available for consumption today, comment on whether both individuals will consume hamburgers.
A recessionary gap exists when aggregate demand is above the full employment level of output.
Answer the following statement true (T) or false (F)
Initially the beef and mutton markets are in equilibrium, then preferences shift away from beef and into mutton. If you are a cattle rancher, the best profit-maximizing strategy is to
A. shift some of your ranching capacity into cattle raising. B. decrease output so as to minimize short run losses. C. increase output so as to increase your market share. D. shut down.