Demand for a good is inelastic if:
A. the quantity effect outweighs the price effect of a price increase.
B. the absolute value of price elasticity is greater than 1.
C. total revenue decreases when price decreases.
D. None of these is true.
Answer: C
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The demand for money increases and the demand curve for money shifts rightward as a result of
A) an increase in real GDP. B) a decrease in the price level. C) a decrease in the nominal interest rate. D) an increase in the use of credit cards. E) a decrease in the real interest rate.
? According to Figure 5-13, if the price of good X falls, the optimal combination will move
A. from U1to a point on a higher indifference curve, such as U3. B. from U2to a point on a higher indifference curve, such as U3. C. from U1to a point on a higher indifference curve, such as U3. D. from U2to a point on a higher indifference curve, such as U1.
In the generalized dividend model, a future sales price far in the future does not affect the current stock price because
A) the present value cannot be computed. B) the present value is almost zero. C) the sales price does not affect the current price. D) the stock may never be sold.
The existence of heavy training costs would provide a rationale for
a. insider-outsider models. b. IS-LM models. c. sticky price models. d. modern efficiency wage models