Assume the price of widgets increases by 22 percent and the quantity supplied increases by 27 percent as a result. The elasticity of supply coefficient is:
a. greater than 1, implying that widgets are normal goods.
b. less than 1, implying that widgets are inferior goods.
c. greater than 1, implying that supply is elastic
d. greater than 1, implying that supply is inelastic.
c
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The real-nominal principle can be stated as
A) only final goods and services should be counted in GDP. B) only the manufacture of real goods is production. C) what matters to people is the purchasing power of money or income. D) production generates income.
A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is
A) zero. B) positive but less than $50,000 per year. C) $50,000 per year. D) more than $50,000 per year.
A decrease in the effective tax rate on capital would cause the IS curve to
A) shift up and to the right. B) shift down and to the left. C) remain unchanged. D) remain unchanged if taxes are fully deductible from income; otherwise, shift up and to the right.
Tickets to the Indiana-Purdue basketball game are usually sold out in advance of game day. This suggests:
a. the price of the tickets must be very high or else people would not consider them valuable. b. the price is set below the equilibrium level. c. the Indiana basketball stadium is relatively small. d. everyone who attends the game will enjoy it.