Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week:
A. demand will become more price elastic.
B. price elasticity of demand will not change as price is lowered.
C. demand will become less price elastic.
D. the elasticity of supply will increase.
C. demand will become less price elastic.
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In words, the equation of exchange says that
A) the total amount spent on final output equals the amount received for final output. B) the amount of money in circulation equals the velocity of the price level. C) changes in the money supply will have no impact on the amount spent on final output. D) when velocity equals 1, nominal GDP equals the price level.
A binding price floor that could be set in the market in the graph shown would be:
A. $23.
B. $16.
C. $8.
D. $12.
Which of the following is not true about gross domestic product (GDP)? a. It includes only final goods and services
b. It reflects production in a particular year. c. Intermediate goods and services are excluded to prevent double counting. d. It excludes purchases of financial assets. e. It includes transfer payments.
The profit-maximizing price charged by a monopolistic competitor is always equal to its average total cost of production
a. True b. False Indicate whether the statement is true or false