Suppose that if poor households have a price elasticity of demand for medical care of 0.70 and wealthy households have a price elasticity of demand for medical care of 0.10, then a 10% increase in the price of medical care would lead to poor households reducing their quantity demanded for medical care by:
A. seven times the amount that wealthy household reduce their quantity demanded for medical care.
B. one-seventh the amount that wealthy households reduce their quantity demanded for medical care.
C. one-tenth the amount that wealthy households reduce their quantity demanded for medical care.
D. ten times the amount that wealthy household reduce their quantity demanded for medical care.
Answer: A
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Gertie saw a pair of jeans that she was willing to buy for $35. The price tag said they were $29.99. Therefore:
A. Gertie should buy the jeans because the price is more than her reservation price. B. Gertie should not buy the jeans because they will be of lower quality than she expected. C. Gertie should buy the jeans because the price is less than her reservation price. D. Gertie should not buy the jeans because the price is not equal to her reservation price.
We can estimate that if a country grows at 7 percent per year, it will double its real GDP per capita in:
A. 2 years. B. 20 years. C. 35 years. D. 10 years.
Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?
a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic furniture producers will gain producer surplus. c. Domestic furniture producers will have a higher rate of technological advance. d. Domestic furniture producers will have more market power.
The term "rent seeking" best describes a situation in which:
A. individuals expend effort searching for a good price on an apartment. B. consumers compete for a limited quantity of the good. C. firms use resources to secure or preserve a monopoly in providing a good or service. D. None of these is a good description of rent-seeking behavior.