What is the relationship between price elasticity of demand and total revenue?
What will be an ideal response?
If demand is elastic, an increase in price reduces total revenue, and a decrease in price increases total revenue.
If demand is inelastic, an increase in price increases total revenue, and a decrease in price decreases total revenue.
If demand is unit elastic, a change in price (either up or down) does not affect total revenue.
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Which of the following is the most liquid asset?
a. A classic art painting. b. A commercial building. c. A savings bond d. A checking account balance e. Gold
Expansionary policies are government policies that
A) decrease aggregate supply. B) increase aggregate demand. C) decrease aggregate demand. D) increase aggregate supply.
According to economists, when two people make exactly the opposite decision
A) one of them is acting irrationally. B) each person evaluates the situation according to his/her individual self-interest. C) one of them is acting out of spite. D) one of them should compromise.
The law of increasing additional cost is due to
A) scarcity. B) inefficient use of technology. C) the fact that resources are not perfectly adaptable for alternative uses. D) the fact that there are always alternatives and it is costly to figure out which alternative is best.