Assume that the price elasticity of demand is ?0.75 for a certain firm's product. If the firm lowers price, the firm's managers can expect total revenue to:
A. remain constant.
B. decrease.
C. increase.
D. either increase or remain constant, depending upon the size of the price decrease.
Answer: B
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Increases in the minimum wage are intended to raise the incomes of low-income workers. Many economists favor a different policy to achieve this goal, a policy that avoids the deadweight losses that result from the minimum wage. What is this policy?
A) the Alternative Minimum Tax B) the earned income tax credit C) distribution of food stamps to low-income consumers D) distribution of vouchers that can be used for rent or mortgage payments
Which of the following will be true if employment grows faster than the population as a whole? a. Output per capita will increase faster than productivity per worker
b. The standard of living will increase. c. Output per capita and productivity per worker will grow at an equal pace. d. Output per worker and productivity per worker will remain unaffected. e. Output per capita will increase at a diminishing rate.
If the spending multiplier is equal to 5, then a $1 initial increase in investment spending will lead to a:
a. 5 percent decrease in real GDP. b. 5 percent increase in real GDP. c. $5 decrease in real GDP. d. $5 increase in real GDP. e. 0.05 percent increase in real GDP.
The largest proportion of Medicaid spending goes to which of the following groups?
a. Blind and disabled b. Elderly c. Children d. Adults