Which of the following is FALSE regarding inelastic demand?
A) Price elasticity of demand is less than 1 (Ep < 1).
B) If a firm raises price, total revenues will go up.
C) Price elasticity of demand is greater than 1 (Ep > 1).
D) If a firm lowers price, total revenues will fall.
C
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The aggregate supply curve relating the price level to real GDP has three distinguishing segments. Which one of the following indicates the segments?
a. The horizontal segment reflects the increasing pressure on the price level as firms bid for resources. The upward-sloping segment reflects the availability of unused resources. The vertical segment reflects the full employment of all resources. b. The horizontal segment reflects the availability of unused resources. The upward-sloping segment reflects the full employment of all resources. The vertical segment reflects the increasing pressure on the price level as firms bid for resources. c. The horizontal segment reflects the full employment of all resources. The upward-sloping segment reflects the increasing pressure on the price level as firms bid for resources. The vertical segment reflects the availability of unused resources. d. The horizontal segment reflects the availability of unused resources. The downward-sloping segment reflects decreasing pressure on the price level as firms bid for resources. The vertical segment reflects the full employment of all resources. e. The horizontal segment reflects the availability of unused resources. The upward-sloping segment reflects increasing pressure on the price level as firms bid for resources. The vertical segment reflects the full employment of all resources.
If macaroni and cheese is an inferior good, then
a. the income effect and the substitution effect work in opposite directions b. as the budget line shifts to the right, consumers demand more macaroni and cheese c. when the price of macaroni and cheese rises, the quantity demanded also rises d. the quantity demanded rises as purchasing power rises e. individuals will not consume macaroni and cheese
The value of marginal product curve is downward sloping because:
A. profits decline as more workers are hired. B. firms must lower price to sell more. C. of the law of diminishing returns. D. at lower wages, only less qualified workers are available.
Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?
A. The Keynesian model assumes that nominal wages are inflexible downward. B. The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family. C. The Keynesian model assumes that workers can lose their jobs to foreign competition during economic downturns. D. The Keynesian model assumes that the level of real GDP is inflexible.