If demand for a good is elastic, then the price elasticity will be:
A. equal to one.
B. equal to zero.
C. greater than one.
D. less than one.
Answer: C
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As conventionally measured, budget deficit and surplus calculations include the revenues and expenditures of
a. only current government operations; government trust funds are omitted. b. all government trust funds except Social Security. c. the Social Security Trust Fund, but other government trust funds are omitted. d. all government trust funds, including Social Security.
An optimizing consumer will select the consumption bundle in which the marginal rate of substitution
a. is equal to the relative price ratio of the goods. b. exceeds the marginal utility of each good by the greatest amount. c. is less than the slope of the budget constraint. d. All of the above are correct.
Explain why sunk costs are irrelevant to choosing the best amount of an activity.
What will be an ideal response?
The Department of Justice has challenged the merger of two firms, and the case has ended up in the Supreme Court. The two firms argue that they will not use their monopoly power to raise prices or to cut output. Under what judicial standard would their merger be allowed, and under what judicial standard would their merger be disallowed?
What will be an ideal response?