Why isn't slope as useful as elasticity to measure the responsiveness of one variable to another?
What will be an ideal response?
The numerical value of slope depends on the units used to measure the variables on the axes. Thus, if two demand curves represent the same demand behavior but are measured in different units (ounces versus pounds, for example), we will get two different measures of responsiveness. Elasticity does not have this problem because it is calculated using percentage change.
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If wages and prices are flexible, an anticipated change in the money supply has no effect on
A) money demand. B) nominal interest rates. C) real GDP. D) the inflation rate.
A sunk cost is one that
a. changes as the level of output changes in the short run b. was paid in the past and will not change regardless of later decisions c. should determine the rational course of action in the future d. has the most impact on profit-maximizing decisions e. influences rational decision makers
Economists can evaluate the desirability of the distribution of income
a. True b. False Indicate whether the statement is true or false
The marginal productivity principle says that a profit-maximizing firm should
A. hire capital until its marginal product is zero. B. hire labor until another worker costs more to hire than he or she can earn for the firm. C. hire the quantities of capital and of labor at which their marginal products are equal. D. hire capital until its marginal product is negative.