Which of the following examples would most likely be measured by the price elasticity of demand?
a. The sale of sweaters peaks during the holiday season and then plateaus.
b. When sweaters are discounted by 10 percent, the number sold doubles.
c. When sweaters go on sale, the company hires two more sales people.
d. The holiday sweater sale lasts until the last garment is sold.
b. When sweaters are discounted by 10 percent, the number sold doubles.
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Refer to the graph below. Critics of supply-side economics would argue that tax rates are currently between:
A. b and d and that a decrease in tax rates will decrease tax revenues
B. 0 and b and that a decrease in tax rates will decrease tax revenues
C. 0 and b and that a decrease in tax rates will increase tax revenues
D. b and d and that a decrease in tax rates will increase tax revenues
If the production of a good generates a detrimental externality, then at that level of production of the good under perfect competition,
a. MU = MSC. b. P < MPC. c. MPC < MSC. d. MPC > MSC.
Suppose a chemical plant in Warzonka produces a by-product that is extremely toxic. The by-product is fatal to plant and animal life upon direct contact, and low-level contamination of the by-product in the environment is linked to cancer. Which of the following would be the best choice for public policy in this case?
a. Command-and-control regulation b. A corrective tax c. A property tax d. A tradable permit system
From uncovered interest parity, we know that when the domestic currency is expected to depreciate, the domestic interest rate should be:
a. greater than the foreign interest rate. b. greater than the foreign exchange rate. c. less than the foreign interest rate. d. less than the foreign exchange rate.