The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 7-7 in the text. Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding
Product A.
Product A Estimated Elasticity for Product A Product B Is Estimated Elasticity for Product B More Elastic or Less Elastic than for Product A?
Beer -0.29 Samuel Adams Boston Lager
Chicken -0.37 Organically raised chicken
Cocaine -0.28 Illegal narcotics
Cigarettes -0.25 Marlboro Lights
Restaurant meals -0.67 Denny's Grand Slam breakfast
What will be an ideal response?
Product A Estimated Elasticity for Product A Product B Is Estimated Elasticity for Product B More Elastic or Less Elastic than for Product A?
Beer -0.29 Samuel Adams Boston Lager More elastic
Chicken -0.37 Organically raised chicken More elastic
Cocaine -0.28 Illegal narcotics Less elastic
Cigarettes -0.25 Marlboro Lights More elastic
Restaurant meals -0.67 Denny's Grand Slam breakfast More elastic
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The exchange rate is 1.5 Bosnian markas per U.S. dollar. The price of a refrigerator in Bosnia is 1,200 markas while in the U.S. it is $1,000 . The real exchange rate is
a. 9/5 b. 5/4 c. 4/5 d. None of the above are correct.
Figure 9-2
indicates that the output of the economy, y1, is
a.
greater than the economy's long-run capacity.
b.
equal to the economy's long-run capacity.
c.
less than the economy's long-run capacity.
d.
in short-run equilibrium but not long-run equilibrium.
The opportunity cost of holding money balances increases when:
A. the inflation rate decreases. B. the interest rate increases. C. the interest rate decreases. D. GDP is far from full employment.
The principle of subsidiarity states that
A) individual countries do not have to give up individual sovereignty for the good of the union. B) the union only has the authority to deal with issues best handled by international action. C) the union is the ultimate arbiter of all European issues. D) the union has no authority within countries.