If a demand curve is perfectly inelastic then:
(a) The elasticity coefficient is equal to infinity;
(b) The demand curve for the good is vertical;
(c) The elasticity coefficient is equal to zero;
(d) Both (b) and (c) above are correct.
Answer: (d) Both (b) and (c) above are correct.
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The law of demand says that
a. the customer is always right b. quantity supplied equals quantity demanded c. price and quantity supplied are inversely related d. price and quantity demanded are inversely related e. income and quantity demanded are directly related
Which of the following is true for a price-searcher firm?
a. Its marginal revenue curve will lie below its demand curve. b. Its marginal revenue curve will lie above its demand curve. c. Its marginal revenue curve is equal to its demand curve. d. Its marginal revenue curve is horizontal at the market equilibrium price.
A decrease in aggregate demand in the short run will reduce ________.
A. the price level and increase the real domestic output B. the real domestic output and have no effect on the price level C. both real output and the price level D. the price level and have no effect on real domestic output
Following World War I and World War II, the United States had a
A. small trade deficit. B. large trade deficit. C. small trade surplus. D. large trade surplus.