In a monopoly where the marginal revenue and price are, respectively, given by $0.50 and $2, the price elasticity of demand is:
A. ?4/3.
B. ?0.75.
C. ?1.
D. ?5/4.
Answer: A
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The demonstration effect suggests that people will save less when they
A. control their spending in order to save more when the real interest rate increases. B. recognize that the real interest rate has increased. C. base their spending decisions (and consequently their saving decisions) on spending decisions of others who spend more than they do. D. base their saving decisions on their projections of income and spending needs over their lifetime.
Suppose that firms in a monopolistically competitive industry are earning positive economic profits. In this situation, you would expect
A. the number of firms in the market to increase. B. each firm will experience an increase in its demand. C. there is a downward shift in the firm’s average cost curve. D. to observe firms reducing their advertising.
An isocost line reveals the
A) costs of inputs needed to produce along an isoquant. B) costs of inputs needed to produce along an expansion path. C) input combinations that can be purchased with a given outlay of funds. D) output combinations that can be produced with a given outlay of funds.
A unit of account is
A) anything that is generally accepted in exchange for goods and services. B) a common measurement in which relative values are expressed. C) an item's ability to hold value over time. D) the exchange of goods and services for other goods and services. E) both a and d