The base year is the year:
A. in which prices are unstable.
B. in which prices are highest.
C. in which prices are lowest.
D. that serves as a reference point or benchmark.
Answer: D
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If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about
a. 0.63, and supply is elastic. b. 0.63, and supply is inelastic. c. 1.60, and supply is elastic. d. 1.60, and supply is inelastic.
By raising the discount rate, the Federal Reserve ________ banks from borrowing more reserves
A) short-changes B) prohibits C) discourages D) encourages
Demand for a luxury item, such as a yacht, is likely to be
A) income elastic and price inelastic. B) income inelastic and price elastic. C) both income elastic and price elastic. D) both income inelastic and price inelastic.
An example of an essential facility is
A) the telephone line into your house. B) U.S. Route 66. C) the Golden Gate Bridge. D) your local pizza parlor.