Which of the following is NOT characteristic of a good with elastic demand?
A) The absolute price elasticity of demand is less than 1.
B) Total revenue decreases if price is increased.
C) Buyers are relatively sensitive to price changes.
D) The percentage change in quantity demanded is greater than the percentage change in price.
Answer: A
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Which of the following is the major difference between the chained consumer price index and the regular consumer price index?
a. The chained index assumes that households purchase the same bundle of goods over a lengthy time period; the regular price index makes allowance for shifts away from goods that have become more expensive. b. The chained index makes allowance each month for shifts away from goods that have become more expensive; the regular consumer price index fails to adjust for these shifts. c. The chained consumer price index reflects changes in the prices of all final goods and services produced during a period, whereas the regular consumer price index reflects only changes in the prices of goods purchased by households. d. The chained consumer price index will generally result in a higher measured rate of inflation than the regular consumer price index.
A monopoly occurs when
A. There is only one producer of a particular good or service. B. A firm gains some level of market power. C. A firm charges a price greater than the equilibrium price. D. There is an underproduction of a good or service by a firm.
The optimal level of air quality
a. is 100 percent, which creates a pollution-free environment b. is smaller the lower the marginal social cost of air quality c. is greater the lower the marginal social benefit of air quality d. is greater the lower the marginal social cost of air quality e. is smaller the greater the marginal social benefit of air quality
A person can benefit from specialization and trade by obtaining a good at a price that is
a. lower than his or her opportunity cost of that good. b. the same as his or her opportunity cost of that good. c. higher than his or her opportunity cost of that good. d. different than his or her opportunity cost of that good.