Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor
If I wanted to buy a mystery novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?
A) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards.
B) She is correct.
C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel.
D) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel.
B
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The Phillips Curve will shift because of:
A. expected inflation. B. normal inflation. C. hyperinflation. D. core inflation.
When there is a liquidity trap, when the Fed adds bank reserves, there is a large effect on borrowing, investment and aggregate demand
a. True b. False Indicate whether the statement is true or false
You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:
A. there is an excess supply of teachers in other districts. B. the wage for teachers in that district is higher than the wage in other districts. C. the wage for teachers in that district is lower than the equilibrium wage. D. the demand for teachers in the inner-city school district is too low.