For any horizontal demand curve, the price elasticity of demand is:
A. infinite.
B. 1.
C. equal to the price of the good.
D. 0.
Answer: A
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If d is the depreciation rate and K is the capital stock, the amount of investment required to keep the economy in a steady state is given by:
A) I = d - K. B) I = d + K. C) I = d × K. D) I = d/K.
Suppose firms in a perfectly competitive market are incurring an economic loss. Over time
A) other firms enter the market, so the price rises and the economic loss decreases. B) some firms leave the market, so the price rises and the economic loss decreases. C) other firms enter the market, so the price falls and the economic loss decreases. D) some firms leave the market, so the price falls and the economic loss decreases.
Consider a particular market-clearing price and quantity under a perfectly competitive equilibrium. As the demand curve at this point becomes more inelastic, the consumer surplus in the market tends to:
A) increase. B) decrease. C) remain the same. D) We do not have enough information to answer this question.
Refer to the above figure. Which panel is consistent with the Fed buying bonds?
A) Panel A B) Panel B C) Panel C D) Panel D