Consider a medical breakthrough that led to the discovery of a simple microchip, which when inserted inside the human ear could prevent certain chronic diseases. The price elasticity of demand for that microchip would most likely be _____
a. highly elastic
b. highly inelastic
c. undefined
d. negative only for high prices
e. positive only for high prices
b
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Refer to the figure above. Everything else remaining unchanged, at what rate will the wage be held if there is downward wage rigidity in the market, when the demand curve shifts to LD2?
A) $50 B) $30 C) $40 D) $20
What is meant by world price of a good? How do the domestic price and the world price of a good together determine whether a country will be an importer or exporter of a certain good?
What will be an ideal response?
Income effect of lower wages implies
a. workers prefer leisure to work. b. an increase in the productivity of labor. c. a fall in the demand for labor. d. workers would want to work more.
The predictive accuracy of relative purchasing power parity improves if:
a. Both countries have highly mobile capital markets. b. Both countries have central bank controls in place so that exchange rates change in an orderly manner. c. Both countries under consideration have high growth rates. d. Both countries are either developed or undeveloped (i.e., one is not developed and the other undeveloped). e. You only are predicting the qualitative change in exchange rates and not the specific exchange rate or quantitative change in the exchange rate.