Assume that you own a small boutique hotel. In an attempt to raise revenue, you reduce your rates by 20 percent. However, your revenue falls. What does this indicate about the demand for your boutique hotel rooms?
A) Boutique hotel rooms are inferior goods.
B) Demand is inelastic.
C) The demand curve for your hotel rooms is vertical.
D) Demand is elastic.
Answer: B
You might also like to view...
Of the following, which is NOT a monetary policy rule the Fed could follow?
A) an unemployment rate targeting rule B) an inflation targeting rule C) a money targeting rule D) a k-percent rule E) a nominal GDP targeting rule
According to classical economists, the government should increase government purchases when
A) the benefits of the spending exceed the costs. B) the economy is in a recession. C) the economy is likely to go into a recession in the next six months to a year. D) inflation is lower than its targeted level.
Globalization does not mean:
A) the homogenizing of markets. B) when one product or one brand is sold in many different international markets. C) the increase in trade among nations. D) the establishment of manufacturing plants in more than one nation. E) the purchase of supplies from foreign firms.
A key factor that determines the geographic extent of a housing market is the distance that commuters are willing to travel from home to work. Which of the following events would NOT help to expand the geographic extent of the housing market in a metropolitan area?
A. Public transit fares decrease B. Price of gasoline declines C. State gasoline tax increases D. none of the above