The smaller the price elasticity of demand, the
a. more likely the product is a luxury.
b. smaller the responsiveness of quantity demanded to a change in price.
c. more substitutes the product has.
d. greater the responsiveness of quantity demanded to a change in price.
b
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If many banks fail, this is likely to cause a/an
a. increase in the currency-to-deposit ratio. b. increase in the reserves-to-deposit ratio. c. a fall in the currency-to-deposit and reserves-to-deposit ratios. d. both a and b. e. none of the above.
Which of the following best describes a cartel?
a. As a monopolist, a group of monopolistically competitive firms that jointly reduce output and raise the price. b. As a monopolist, a group of cooperating oligopolists that jointly reduce output and raise the price. c. A monopolist that reduces output and raises price. d. A group of identical non-cooperative oligopolists that are able to reproduce a monopoly equilibrium through price rivalry.
Economic models start with the assumption of
a. exogenous prices. b. the laws of supply and demand. c. equilibrium. d. rational behavior.
A consumption tax that replaces an income tax
a. only taxes a household on the money it spends. b. discourages saving. c. would likely result in a lower level of saving than an income tax. d. ultimately taxes income twice - once when the household pays income tax and once when the household makes a purchase.