Which of the following statements is true about the price elasticity of demand?
A) As the number of substitutes for a product increases, the price elasticity of demand for that good decreases.
B) If the budget share of a particular good in a consumer's bundle increases, the price elasticity of demand for that good is likely to decrease.
C) The price elasticity of demand for a good is generally higher in the long run than in the short run.
D) The demand for a good with a price elasticity of demand of zero is highly responsive to price changes.
C
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If a firm shuts down in the short run and produces no output, its total cost will be
a. zero b. equal to total variable cost c. equal to total fixed cost d. equal to explicit costs only e. impossible to calculate
Unions cannot exert market power without exerting control over the market supply curve for labor.
Answer the following statement true (T) or false (F)
If the misery index is 12 and the inflation rate is 4 percent, we can conclude
A. The AD curve must be shifting to the right. B. The inflation rate will quickly rise by 8 percent. C. Monetary policy is not succeeding at keeping inflation low. D. The unemployment rate must be 8 percent.
If unemployment equals the natural unemployment rate, then there
A) is zero unemployment. B) is only frictional or structural unemployment. C) are no job openings existing at the time. D) is less than full employment.