If the own price elasticity of demand is infinite in absolute value, then:
A. the demand curve is horizontal.
B. consumers do not respond at all to changes in price.
C. demand is perfectly inelastic.
D. demand is neither perfectly inelastic nor is the demand curve horizontal.
Answer: A
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In an open economy, a shift down and to the left of the IS curve could have been caused by
A) a decline in the foreign real interest rate. B) an increase in the demand for domestic goods relative to foreign goods. C) an increase in foreign output. D) a decline in domestic output.
The Fed raised interest rates in 2004 and 2005 . This implies, other things the same, that the Fed
a. increased the money supply because it was concerned about unemployment. b. increased the money supply because it was concerned about inflation. c. decreased the money supply because it was concerned about unemployment. d. decreased the money supply because it was concerned about inflation.
If an excise tax is placed on a product that has a perfectly inelastic demand, then:
A. the entire tax will be paid by the consumer. B. the entire tax will be paid by the producer. C. the consumer and producer will each pay a share of the tax. D. the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
Refer to the below data. If columns 1 and 3 are this firm's demand schedule, maximum economic profit will be:
Answer the question on the basis of the following demand and cost data for a specific firm.
A. $60
B. $70
C. $80
D. $90