If there is no response in quantity demanded to a change in price, demand is
A) perfectly inelastic.
B) perfectly elastic.
C) elastic.
D) unit-elastic.
Answer: A
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Assume First Central Bank has a desired reserve ratio of 15 percent; $80,000 in total deposits, loans equal to $60,000, and has $20,000 in actual reserves. First Central can make additional loans totaling
A) $8,000. B) $12,000. C) $20,000. D) $60,000. E) $80,000.
Hurricane Katrina destroyed much of New Orleans and other parts of the South. Which of the following statements is true? The hurricane:
A. caused the production possibilities frontier of the United States to shift in. B. caused the production possibilities to increase, since it created a lot of work to rebuild the city affected areas. C. caused the production possibilities frontier of the United States to shift. D. didn’t change the production possibilities frontier, but moved from a point on the frontier to a point inside the frontier.
If real GDP grew by 5 percent during one year and population also grew by 5 percent, then
a. real GDP did not change. b. nominal GDP did not change. c. the change in real GDP equaled the change in nominal GDP. d. real GDP per capital did not change.
Suppose lawn mowers are part of the market basket used to compute the CPI. Suppose also that the quality of lawn mowers deteriorates while the price of lawn mowers stays the same. If the Bureau of Labor Statistics is able to precisely adjust the CPI for the improvement in quality, then, other things equal,
a. the CPI will rise. b. the CPI will fall. c. the CPI will stay the same. d. lawn mowers will no longer be included in the market basket.