If the absolute value of the price elasticity of demand for cell phone service is 3, then if the price of cell phone service increases by 1 percent, quantity demanded would:
A. increase by 3 percent.
B. decrease by 0.33 percent.
C. increase by 0.33 percent.
D. decrease by 3 percent.
Answer: D
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Suppose a government is considering imposing either a tariff or a quota on imported grain, and either policy will result in exactly 750 tons of grain being imported. How do these policies differ?
A. The price of grain under the quota will be higher than the price under the tariff. B. The price of grain under the tariff will be higher than the price under the quota. C. Domestic production will be higher with the quota than with the tariff. D. The quota will generate revenue for the firms that hold import licenses, while the tariff will generate revenue for the government.
Suppose that the United States decided to subsidize a major competitive effort by the semiconductor industry to bring to market the next generation computer chip. Under the current rules of the WTO and GATT, the U.S. effort is
A) allowed as long as the subsidies are a small percent of the total cost. B) allowed as long as the subsidies do not involve a direct payment to the industry. C) not allowed. D) neither allowed nor disallowed. E) allowed as long as the subsidies do not succeed in creating a new product.
The supply of Thai baht in the foreign exchange market originates with:
a. tourists who go on vacation to Thailand. b. the export of Thai oranges and other goods. c. Thai residents who wish to purchase goods from other countries. d. the Thai royal family. e. Thai central bank intervention to stop the peseta from depreciating.
Suppose our economy is in macroeconomic equilibrium with an upward-sloping aggregate supply curve and a downward-sloping aggregate demand curve. An increase in aggregate demand will
A. increase aggregate supply. B. decrease the price level. C. cause the aggregate supply curve to shift to the right. D. increase real GDP.