If Herbert, the hair stylist, raises the price of his cuts from $13 to $15 and finds the number of cuts falls from 300 to 260, then the demand for Herbert's cuts in this range is:
a. price inelastic.
b. price elastic.
c. unit elastic.
d. cross elastic.
e. income inelastic.
c
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
A tax where wealthy people pay a larger percentage of their income than poor people is known as a(n):
a. excise tax. b. flat tax. c. proportional tax. d. progressive tax. e. regressive tax.
In the long run, the Fed can change the inflation rate but not the unemployment rate
a. True b. False
If the United States increased its budget deficit, and it is at or near full employment, the most likely effect is to crowd
A. in investment and crowd out net exports. B. out investment and crowd in net exports. C. in investment and crowd in net exports. D. out investment and crowd out net exports.