A government wants to reduce electricity consumption by 5%. The price elasticity of demand for electricity is -0.5. The government must ________ the price of electricity by ________.
A. raise; 1.0%
B. raise; 0.1%
C. lower; 0.5%
D. raise; 10.0%
Answer: D
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If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the
A) good is a normal good. B) good is an inferior good. C) income elasticity of demand is 0.5. D) income elasticity of demand is 2.0. E) income elasticity of demand is 5.0.
As Sam moves rightward along his indifference curve, his marginal rate of substitution
A) is diminishing. B) is increasing. C) remains constant. D) shows the change in his income.
One of the series included among the lagging indicators is
A) the change in sensitive material prices. B) the index of industrial production. C) employees on non-agricultural payrolls. D) average duration of unemployment.
A firm produces staples in a perfectly competitive market and hires workers in a perfectly competitive labor market. Which of the following is true?
a. The supply curve of staples is horizontal. b. The supply curve of workers is horizontal. c. The firm's demand curve for labor is horizontal. d. The marginal revenue product of labor curve is horizontal. e. The marginal product of labor curve is horizontal.