If there are few close substitutes for a good, demand tends to be relatively:
A. unitary elastic.
B. elastic.
C. inelastic.
D. neither elastic, inelastic, nor unitary elastic.
Answer: C
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Considering the concept of cross-price elasticity, if two goods are complements:
A. an increase in the price of one will cause a decrease in the demand for the other. B. an increase in the price of one will cause an increase in the demand for the other. C. a decrease in the price of one will cause a decrease in the demand for the other. D. the cross-price elasticity is positive.
Answer the following statements true (T) or false (F)
1. The members of the Board of Governors of the Federal Reserve System are appointed by the U.S. president. 2. Members of the Board of Governors are appointed for five-year terms. 3. All members of the Board of Governors are members of the Fed’s Open Market Committee. 4. Each Federal Reserve Bank can issue Federal Reserve notes. 5. Each District Reserve Bank has branch banks.
To internalize a consumption externality in the market for a toxic chemical
a. a unit subsidy can be offered on production equal to the MEC b. a unit tax can be imposed equal to ?MEB c. a tax should be set equal to the MSC d. none of the above
Historical evidence for the U.S. economy indicates that changes in investment over the business cycle are the biggest cause of changes in
a) profits. b) real GDP. c) consumer spending. d) auto sales.