Elasticity refers to the law in economics that a higher price will lead to a lower quantity demanded.
Answer the following statement(s) true (T) or false (F)
Ans: False
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If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods
Indicate whether the statement is true or false
If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of deposits would be (assume that citizens prefer to keep 10% of their money as cash)
A) 100/0.25 times 1.1 which is 440. B) 100/0.35 which is approximately 286. C) 100/0.35 times 1.1 which is approximately 314. D) 100/0.10 which is 1000.
When the United States imposes an import quota on a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus
A) increase; smaller than; increase B) decrease; larger than; decrease C) decrease; larger than; increase D) decrease; equal to; increase
If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is ________ and the elasticity of supply is ________
A) inelastic; 0.5 B) inelastic; 2.0 C) elastic; 0.5 D) elastic; 2.0