Which of the following is an example of inelastic demand?
a. A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk.
b. A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk.
c. A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk.
d. A 10 percent increase in the price of milk leads to a 10 percent increase in the quantity demanded of milk.
e. A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.
c
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If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will
A. fall by 6%. B. remain constant. C. fall by 12%. D. rise by 6%.
The ratio at which nations will exchange one product for another is known as the
A. terms of trade. B. exchange rate. C. discount rate. D. balance of trade.
The unemployment rate will never equal zero percent because
A) there are some people who do not want to work. B) there will always be discouraged workers. C) some portion of the labor force will always be between jobs. D) cyclical unemployment will always exist.
With the help of a suitable diagram, explain how in a two-country, two-commodity model one of the countries may fail to specialize completely despite enjoying comparative advantage in one of the goods.
What will be an ideal response?