If the elasticity of demand for cigarettes is 0.4, a seller should
A. Decrease price to increase total revenue.
B. Reduce price to maximize profits.
C. Increase price because the percentage change in quantity demanded will be greater than the price effect.
D. Increase price to increase total revenue.
Answer: D
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Refer to the below graph of the market for low-skilled labor. Sd is the supply of domestic resident workers, and St is the total supply of labor including undocumented workers. Suppose the government cuts off the flow of illegal immigrants to this market. By how much will the employment of legal residents be increased?
A. 15M
B. 120M
C. 135M
D. 22M
Use the LR curve to show what happens to output, the real interest rate, and the price level in the short run and in the long run if the government provides a tax credit to people who buy a new home, which leads to an increase in new housing
investment.
The balance between spending flows into a country and spending flows out of that country is called a country's
A. current account. B. capital account. C. foreign exchange. D. balance of payments.
Foreign portfolio investment is sometimes called hot money because:
A. it is often invested in the assets which yield the highest returns in the world. B. earnings often go untaxed by the home government. C. it can be withdrawn from a country very quickly. D. it is very difficult to trace.