When the price of Cosmopolitan magazine decreases from $5 to $3, the quantity demanded increases from 600,000 to 1,000,000 copies each month. Using the midpoint method, the price elasticity of demand equals
A) 1.
B) 3.
C) 2.
D) 1/3.
E) 1/2.
A) 1.
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The statement "What the economy needs is a good war" is a perverse way of acknowledging that
a. patriotism is an important factor influencing people's acceptance or rejection of specific political parties and that these parties affect national economic performance b. over-population can ignite a population-induced business cycle c. wars require new technology, illustrating the idea that necessity is the mother of invention d. governments can be a cure worse than the disease e. war generates new and multiple demands for goods in the economy and that can jump start an economy that is in a recession into its recovery phase
According to the Laffer curve,
a. an increase in tax rates will always cause tax revenues to increase. b. when marginal tax rates are high, an increase in tax rates is likely to cause tax revenues to increase. c. when marginal taxes are low, an increase in tax rates will probably cause tax revenues to decline. d. when marginal tax rates are high, a reduction in tax rates may increase tax revenue.
If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below.
If the regulated pay-per-view charge to watch a fight were $5 per household, then what would be the loss in total economic surplus relative to when the there is no charge to watch the fight?
A. $225 million B. $625 million C. $50 million D. $25 million
Perfectly competitive markets are characterized by each of the following except
A. substantial barriers to entry and exit. B. many small potential buyers. C. many small potential sellers. D. identical products.