A 2 percent increase in the price of shoes leads to a 5 percent decrease in the quantity demanded of shoes. The absolute price elasticity of demand is
A. 2.5.
B. 0.2.
C. 1.
D. 0.4.
Answer: A
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Because there is no formal agreement among the participating firms, firms that engage in tacit collusion are exempt from prosecution under the anti-trust laws
Indicate whether the statement is true or false
Supplier power tends to be low when
a. Suppliers are less concentrated b. Inputs provided by the supplier are not vital c. Inputs are less differentiated d. All the above
Joan is deciding where to spend her spring break. If she goes to Cancún, Mexico, the trip will give her 9,000 units of utility and will cost her $300. If she travels to Florida instead, the trip will give her 8,000 units of utility and will cost her only $200. Joan will do best going to:
A. Mexico because her total pleasure will be greater. B. Florida because her pleasure per dollar will be greater. C. Mexico because her pleasure per dollar will be greater. D. Florida because her total cost will be lower.
Which of the following statements is/are correct?I.Depository institution managers undertake riskier actions than they otherwise would because of the existence of deposit insurance.II.Because of the existence of deposit insurance, depositors in savings and loans and other banks have little incentive to investigate the financial stability of these institutions.
A. I only B. II only C. both I and II D. neither I nor II