Suppose the own price elasticity of demand for good X is ?5, and the quantity of good X decreases by 5 percent. What would you expect to happen to the total expenditures on good X?
A. Unchanged
B. Decrease
C. Increase
D. Neither increase, decrease, nor remain unchanged
Answer: B
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A firm operating in a purely competitive labor market has the following marginal revenue product schedule.WorkersMRP1$24222320418516614712If the wage rate decreases from $17 to $13, by how much will the firm expand employment?
A. 5 workers B. 4 workers C. 3 workers D. 2 workers
A 2 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand is
A) 2.5. B) 1. C) 0.4. D) 0.2.
In the absence of taxes, Carlos would prefer to purchase a large fishing boat with a 75 hp motor. The government has recently decided to place a tax on boats with 75 hp motors or higher. If Carlos decides to purchase a smaller boat with a 50 hp motor as a result of the tax, which of the following statements is correct?
a. Other people who choose to purchase large boats will incur the cost of the deadweight loss of the tax. b. There are no deadweight losses as long as some people still choose to purchase large boats. c. In order to determine the size of the deadweight loss, we must add the revenues from the tax to the loss in Carlos's consumer surplus. d. Carlos is worse off, and his loss of welfare is part of the deadweight loss of the tax.
The Taylor rule states that if real GDP rises 1 percent above potential GDP the federal funds rate should be raised, relative to the current inflation rate, by ______.
a. 0.5% b. 1% c. 2% d. 4%