A recent decline in interest rates made home construction more affordable for many families. The consequent increase in construction produced a rightward shift in the demand curves for construction materials. Economists would say that the change in demand for materials is due to
A. the principle of marginal productivity.
B. rent seeking.
C. diminishing marginal returns.
D. derived demand.
Answer: D
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The diagram below shows Spencer's annual demand for videos. Spencer currently rents videos from Blockpopper's, which charges $2.50 per rental.
(i) How many videos does Spencer rent each year? How much consumer's surplus does Spencer receive from renting videos?
(ii) Blockpopper's starts a "frequent viewers" club. For a membership fee of $35 per year, club members can rent as many videos as they wish at the discounted price of $2 per rental. Should Spencer join the "frequent viewers" club? If yes, how much surplus value would Spencer receive as a club member? If no, what membership fee would Spencer be willing to pay to join the club?
Which of the following raises the price of a used car and increases the equilibrium quantity sold?
A) a new 8 percent federal excise tax placed on all new car purchases B) an increase in wages for used car salespeople C) a special rebate program on all new cars D) None of the above answers is correct
Which of the following statements is true?
A) If the price of a good is raised and total revenue does not change, demand is perfectly elastic. B) If the price of a good is lowered and total revenue increases, demand is inelastic. C) If the price of a good is lowered and total revenue decreases, demand is elastic. D) If the price of a good is raised and total revenue increases, demand is inelastic.
Menu costs are the:
a. cost of changing interest rates. b. cost of converting currencies. c. cost of changing prices. d. cost of changing exchange rates.