A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91 . The administration is considering a tuition increase to help balance the budget. The revenue-maximizing decision is to
a. decrease tuition, which should boost enrollment enough to balance the budget.
b. decrease tuition, which would bring in more revenue.
c. leave tuition as is-an increase would not help balance the budget.
d. increase tuition, which would bring in more revenue.
d
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In an attempt to limit the supply of illegal liquor, the Russian government has restricted sugar availability (sugar is used to increase alcohol content). Russians also like to sweeten their tea with jam, another product made using sugar. Which graph in Figure 4-11 depicts the impact of sugar rationing on the Russian tea market?
A. 1 B. 2 C. 3 D. 4
In the IO perspective it is important to enter an industry with
a. High barriers to entry b. Differentiated products c. Small number of competing firms of different sizes d. All of the above
The government of a country Amenia imposes a ceiling on the price of bread. Which of the following is most likely to be true?
a. It implies that the price of bread prevalent in Amenia is higher than what the equilibrium price would have been. b. Imposing this price ceiling is likely to raise economic welfare in Amenia as the government tries to ensure that most people can at least afford bread. c. It will cause an excess demand for bread in the market. d. The market is likely to remain in equilibrium even after the price ceiling is imposed.
Expansionary fiscal policy can be used to reduce cyclical unemployment by
A. increasing aggregate demand so as to raise real Gross Domestic Product (GDP). B. increasing long-run aggregate supply so as to raise real Gross Domestic Product (GDP). C. eliminating inefficiencies from labor markets. D. raising nominal wages so as to encourage workers to work more hours.