The price elasticity of demand for a printer is estimated to be 1 no matter what the price or quantity demanded. An increase in price by 10% will
a. Increase quantity demanded by 10%
b. Decrease quantity demanded by 10%
c. Increase demand by 10%
d. Decrease demand by 10%
b
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A Swiss watch company advertises its history of superior craftsmanship. The company thinks that this would
a. Make the demand for the product less elastic b. Make the customers less sensitive to the price c. Assist them with differentiating their product d. All of the above
In long-run equilibrium, the perfectly competitive firm produces: a. where P = MC = AC
b. at the lowest point on its long-run average cost curve. c. where its long-run average cost curve is tangent to its horizontal demand curve. d. at a level of output such that all of the above are true.
If MPC = 0.75, a $40 billion decrease in government purchases would have what size effect on the "first round" of changed consumption, and what effect on AD?
a. reduce "first round" consumption by $160 billion; reduce AD by $640 billion b. reduce consumption by $120 billion; reduce AD by $480 billion c. reduce consumption by $40 billion; reduce AD by $160 billion d. reduce consumption by $30 billion; reduce AD by $160 billion
The law of diminishing returns to labor implies that
a. capital is more productive than labor b. workers become less efficient once they have a secure job c. output increases at a decreasing rate with the employment of new workers d. employers pay workers a wage rate that is less than the workers' MRP e. capital is less productive than labor