Assuming price elasticity of demand is reported as an absolute value, a good with unit elastic demand has an elasticity:
A. between zero and one.
B. greater than one.
C. less than one, but greater than zero.
D. equal to one.
D. equal to one.
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If a tax increase of $8 billion caused real GDP to decline by $32 billion, then the economy's MPC is
A. 0.5. B. 0.9. C. 0.6. D. 0.8.
The economic way of thinking would approach the question "Is this industry competitive?" by
A) counting the number of firms in the industry. B) comparing the ratio of prices to costs across the industry. C) assessing the freedom of entry into the industry. D) evaluating the actual structure of the industry to the competitive standards articulated in antitrust legislation.
You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants
Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run? A) If your success continues, you will be likely to establish a franchise and expand your market size. B) Your competitors are likely to change their menus to make their products more similar to yours. C) If you continue to maintain consistent quality, you will be able to earn profits indefinitely. D) Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero.
Suppose a 50-seat bus is about to depart from Boston to New York with five empty seats. The total cost to the bus company of the trip is $1,000 and no services, food, or beverages are provided to passengers. Use marginal analysis to develop conditions under which the bus company would be willing to sell tickets for the five remaining seats.
A. The bus company would be willing to sell the five remaining tickets at a price of at least $20 each to cover the cost per seat of those passengers. B. The bus company would be willing to sell the five remaining tickets at any price over $0 because there is no additional cost of five more passengers. C. The bus company would not be willing to sell the five remaining tickets because it already covered the cost of the trip with the revenue from the 45 passengers on board. D. The bus company would be willing to sell the five remaining tickets at a price of at least $25 each because they need to make a profit on each passenger.