Compare and contrast the relative elasticities that you are likely to find between toothpicks and furniture. Explain your answer
What will be an ideal response?
Toothpicks since they represent a relatively small part of a typical consumer's budget are likely to be inelastic in demand. Furniture by contrast is a big ticket item and is likely to be more price elastic since consumers are going to be more sensitive to a given price change.
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Automatic stabilizers are fiscal policy measures that
A) must be determined by the Congress in each budget. B) do not require new legislation. C) are determined by the Federal Reserve System. D) are part of discretionary fiscal policy.
Which of the following countries have used adjustments to the required reserve ratio as a primary tool of monetary policy?
A. United States B. China C. Mexico D. India
Using time-series data, the demand function for a profit-maximizing monopolist has been estimated asQd = 142,000 - 500P + 6M - 400PRwhere Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2014 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:MC = 200 - 0.024Q + 0.000006Q2Total fixed cost is forecast to be $500,000 in 2016. The forecasted marginal revenue function for 2016 is:
A. MR = 200,000 - 0.004Q B. MR = 424 - 0.004Q C. MR = 110 - 0.002Q D. MR = 424 - 0.002Q E. MR = 120 - 0.002Q
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.