The price elasticity of demand for eggs is -0.27. Thus, -0.27 is the:
A. size of the shift in the demand for eggs when the price of eggs changes by one percent.
B. percentage change in the quantity demanded of eggs when the price of eggs increases by one percent.
C. percentage change in the price of eggs when the quantity demanded of eggs increases by one percent.
D. size of the percentage change in the quantity supplied of eggs when the demand for eggs changes due to a price change.
Answer: B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
For consumers, goods A and B are complementary goods. The cost of a resource used in the production of A decreases. As a result
A) the equilibrium price of B will fall and the equilibrium price of A will rise. B) the equilibrium price of B will rise and the equilibrium price of A will fall. C) the equilibrium prices of both A and B will rise. D) the equilibrium prices of both A and B will fall.
The average investor must weigh the benefits of liquidity against
A) the high taxes generally levied on liquid assets. B) the lower returns on liquid assets. C) the high transactions costs involved in disposing of liquid assets. D) the greater variability in the nominal returns on liquid assets.
In the 1970s, the Organization of Petroleum Exporting Countries (OPEC) tripled the price of petroleum, causing automobile manufacturers to look for ways to produce more fuel-efficient cars by substituting aluminum and plastic for steel. This was primarily a response to the economic question of:
A) When will each good be produced? B) For whom shall the goods be produced? C) What goods and services should a society produce? D) How should goods and services be produced?