Suppose that the price elasticity of demand for an ice cream cone is -1.9 . If the local ice cream shop owner wants to increase total revenue, what would you recommend he or she do?
What will be an ideal response?
The owner should lower the price of ice cream cones. Since demand is elastic, the percentage increase in quantity demanded will be larger than the percentage decrease in price. Therefore, total revenue will rise.
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Explain how a decrease in housing prices may reduce the wealth of some while increasing the wealth of others. What effect would this have on aggregate consumption?
What will be an ideal response?
Linda, a business management student, works full time as a salesperson in a shoe store. According to the unemployment statistics, Linda is considered employed
a. True b. False Indicate whether the statement is true or false
Suppose the reserve requirement is 20 percent and banks hold no excess reserves. A $1 billion purchase of government securities by the Fed will:
A. reduce the potential amount of checkable deposits in the banking system by $1 billion. B. reduce the potential amount of checkable deposits in the banking system by $5 billion. C. increase the potential amount of checkable deposits in the banking system by $1 billion. D. increase the potential amount of checkable deposits in the banking system by $5 billion.
Suppose the following information describes the economy:GDP2,000Consumption1,500Government Spending300Net taxes400Public saving equals ________ and national saving equals ________.
A. 200; 100 B. 200; 300 C. 100; 200 D. 100; 100