The responsiveness of demand to changes in income holding the good's relative price constant is
A. cross price elasticity of demand.
B. elasticity of supply.
C. price elasticity of demand.
D. income elasticity of demand.
Answer: D
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A good economic model
A) describes every aspect of the economic world, with no exception. B) includes all those features of the world that can be described numerically. C) includes only those features of the world that are needed for the purpose at hand. D) should not include more than two variables.
Econometrics is the use of statistics to quantify and test economic models
Indicate whether the statement is true or false
The classical view of the quantity theory of money assumes that the velocity of money
a. is constant b. will rise if the money supply rises and fall if the money supply falls c. will rise if the money supply rises, but it will not change if the money supply falls d. will fall if the money supply rises, and it will rise if the money supply falls e. will fall if the money supply rises, but it will not change if the money supply falls
Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's:
A. price, output, and average total cost would all be higher.
B. price and average total cost would be higher, but output would be lower.
C. price, output, and average total cost would all be lower.
D. price and output would be lower, but average total cost would be higher.