Suppose the president of a college argues that a 25 percent tuition increase will raise revenues for the college. It can be concluded that the president thinks that demand to attend this college is:
A. elastic.
B. inelastic, but not perfectly inelastic.
C. unitary elastic.
D. perfectly elastic.
Answer: B
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Are sellers always able to produce a surplus of the goods they sell?
A) No, because almost all goods are scarce. B) Only if they can increase supply faster than demand increases C) Only if they can prevent new uses for the good from being developed. D) Yes, if they insist upon receiving a sufficiently high price that is above the market clearing level.
If a market is perfectly competitive and is in long-run equilibrium, which of the following conditions does not hold?
A) Price is equal to the minimum long-run average cost of production. B) Economic profit equals zero. C) The value of the last unit of output produced is equal to the value of the resources used to produce it. D) There is an incentive for additional firms to enter the market because existing firms are earning revenues in excess of the explicit costs of production.
The statement "Gross domestic product (GDP) values all output equally" means that:
a. household production is treated the same as production by firms b. depreciation of manufactured capital is treated the same as depletion of natural resources. c. the purchase of pollution control equipment is valued the same as pollution itself. d. leisure time is valued the same as time spent working a job. e. the market price of output is the measure of that output's value.
Other things constant, if the Fed decreased the discount rate,
a. the earnings of the Fed would increase. b. the incentive of commercial banks to borrow from the Fed would be reduced. c. borrowing from the Fed will tend to increase and the money supply will tend to expand. d. borrowing from the Fed will tend to decrease and the money supply will tend to decline.