After full adjustment to a price change has occurred, the absolute price elasticity of demand for an item is equal to 1.5. In the short run, the absolute price elasticity of demand for the item was probably
A) less than 0.
B) greater than 0.
C) less than 1.5.
D) greater than 1.5.
Answer: C
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Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________
A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase
In which decade did the U.S. federal government first establish a system of agricultural price supports?
A) 1990s B) 1970s C) 1950s D) 1930s
Refer to the accompanying table. The law of diminishing marginal utility:UnitsUtils Per Year from T-shirtsUtils Per Year from Sweaters0001754002135720318096042101120
A. applies to both t-shirts and sweaters. B. applies to sweaters but not t-shirts. C. applies to t-shirts but not sweaters. D. does not apply to either t-shirts or sweaters.
If demand for a product increases, how is market equilibrium restored?
a. As the product’s price increases, the quantity supplied increases until a new equilibrium is gained. b. As the product’s price decreases, the quantity supplied increases until a new equilibrium is gained. c. As the product’s price increases, the quantity supplied decreases until a new equilibrium is gained. d. As the product’s price decreases, the quantity supplied decreases until a new equilibrium is gained.