Why do you think that the demand for coffee is less elastic than the demand for restaurant meals?
What will be an ideal response?
It may have to do with the availability of good substitutes or percentage of the consumer's budget. People can always eat at home. But it's harder to find a good substitute for coffee, so people are less sensitive to coffee price changes than to restaurant meal price changes. Also, coffee is a much smaller percentage of the consumer's budget than meals.
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An economy consists of two goods: beef and lamb. Of all the points on this economy’s production possibilities frontier, which one is best in terms of efficiency?
What will be an ideal response?
John and Robert are having an argument about the recent economic downturn in Florin. According to John, government intervention is not required to bring the economy back to the natural level of real GDP. However, Robert believes that the only way to restore the economy is to increase aggregate demand through government intervention. From the above argument, we can conclude that Robert believes in
the _____ of thought. a. Keynesian school b. classical school c. neoclassical school d. new classical school
When property rights are well defined and markets are competitive, the
a. market equilibrium violates the conditions for economic efficiency. b. market equilibrium is consistent with economic efficiency. c. conditions necessary for economic efficiency no longer apply. d. quantity supplied will rarely equal the quantity demanded.
When an economy's resources are not fully employed, then it must be true that the:
A. production point is located outside and to the right of the production possibilities curve. B. production point is located along the production possibilities curve. C. production point is located inside and to the left of the production possibilities curve. D. production possibilities curve shifts to the left.