Most demand curves are relatively elastic in the upper-left portion because the original price:
A. and quantity from which the percentage changes in price and quantity are calculated are
both large.
B. and quantity from which the percentage changes in price and quantity are calculated are
both small.
C. from which the percentage price change is calculated is small and the original quantity
from which the percentage change in quantity is calculated is large.
D. from which the percentage price change is calculated is large and the original quantity from
which the percentage change in quantity is calculated is small.
Answer: D
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Refer to Figure 6-6. As price falls from PA to PB, the quantity demanded increases most along D1; therefore
A) D1 is more elastic than D2 or D3 B) D1 is more inelastic than D2 or D3. C) D1 is elastic at PA but inelastic at PB. D) D1 is unit elastic.
Production is efficient if the economy is producing at a point
a. on the production possibilities frontier. b. outside the production possibilities frontier. c. on or inside the production possibilities frontier. d. inside the production possibilities frontier.
After taking out a one year loan with an annual interest rate of 5 percent, Tommy pays $2,100 back to the bank. The principal of the loan must be ________ and the interest payment must be ________.
A. $2,100; $100 B. $100; $2,000 C. $2,000; $100 D. $100; $2,100
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease