Suppose that the elasticity of demand for a product is 0.5 and price decreases by 20%. By what percentage will quantity demanded increase?
A. 0.5%
B. 5%
C. 10%
D. 40%
Answer: C
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A necessary condition for "perfect competition" is
A) price searchers. B) price takers. C) legal restrictions on entry into the market. D) a small number of huge firms. E) widespread and long-run economic profits.
Suppose the economy is in a recession and the government decides it needs to reduce the budget deficit. Other things equal, this would tend to
A) shift the IS curve to the right. B) shift the IS curve further to the left. C) shift the MP curve further down. D) shift the MP curve up.
What does empirical research suggest about the existence of pollution havens?
What will be an ideal response?
Marginal cost is calculated for a particular increase in output by
A) multiplying the total cost by the change in output. B) multiplying the change in total cost by the change in output. C) dividing the total cost by the change in output. D) dividing the change in total cost by the change in output.