Price elasticity of demand refers to the ratio of the:
A. percentage change in price of a good in response to a percentage change in quantity demanded.
B. percentage change in price of a good to a percentage increase in income.
C. percentage change in the quantity demanded of a good to a percentage change in its price.
D. percentage change in the quantity demanded of a good to a percentage change in income.
Answer: C
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If advertising makes demand of a product more elastic, it makes sense for a firm to
a. Decrease the price of the product b. Increase the price of the product c. Leave the price unchanged d. None of the above
Which of the following is the chief link between the U.S. federal budget deficit and the U.S. trade deficit during the 1980s?
a. High U.S. interest rates led to a rise in the relative value of the dollar b. High U.S. interest rates led to a decrease in the relative value of the dollar. c. Higher interest rates resulted in the crowding out of some private investment, reducing the stimulating effect of the government's deficit. d. The U.S. price level declined relative to that of foreign countries, causing U.S. interest rates to fall. e. The additional fiscal stimulus provided by a higher government deficit encouraged some firms to invest more.
According to the Coase Theorem
a. efficiency can result only if producers hold the property rights b. an efficient outcome is possible as long as property rights are assigned c. efficiency is not possible in the presence of an environmental externality d. none of the above
Recall the Application. When applying the Taylor Rule to the decade of 2000, economist John Taylor found that past experience showed that from 2001 to 2004, the Fed should have ________ interest rates instead of ________ interest rates
A) raised; not changing B) not changed; lowering C) lowered; raising D) raised; lowering