If the price of a good decreases by 5% and the quantity demanded increases by 5%, then at that price, the good is
A. unit elastic.
B. perfectly inelastic.
C. elastic.
D. inelastic.
Answer: A
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Why do economists think that the structural deficit is a good measure of the direction of fiscal policy?
a. Because it adjusts over the business cycle, and reflects the fiscal stimulus of policy. b. Because it changes when policy changes, rather than when the economy changes. c. Because it changes when monetary policy changes, reflecting the interest rate cost of debt. d. Because it adjusts automatically, rather than requiring specific legislation.
In the following graph, the price of capital is $12 per unit. How many units of labor should the firm use in order to produce 200 units of output at the least cost?
A. 22 units of labor B. 30 units of labor C. 18 units of labor D. 40 units of labor E. 12 units of labor
Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza
A) ice cream and hot fudge are complements. B) ice cream and hot fudge and substitutes. C) ice cream and hot fudge are normal goods. D) ice cream is a normal good and hot fudge is an inferior good.
When is disclosure economically desirable?