If the absolute price elasticity of demand is 0.2, a 10 percent increase in the price will cause
A) the quantity demanded to decrease by 2 percent.
B) the quantity demanded to decrease by 20 percent.
C) the quantity demanded to decrease by 5 percent.
D) the quantity demanded to decrease by 0.2 percent.
A
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Briefly and concisely define the following terms:
a. price discrimination b. tying contracts c. concentration ratio d. market power
In preparing their estimates of the stimulus package's effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. Economist Robert Barro argues that during wartime, the military expenditures multiplier would be
________ the administration's estimate of the government purchases multiplier, and economists Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo argued that when short-term interest rates are zero, the government purchases multiplier would be ________ the administration's estimate. A) higher than; lower than B) lower than; higher than C) higher than; equal to D) equal to; lower than
Behavioral economists suggest that brand-loyalty, which can be a source of monopoly power for the producer, may be explained by consumers' tendency to have the:
A. Anchoring effect B. Mental accounting effect C. Status quo bias D. Confirmation bias
The demand curve shifts rightward from D0 to D1 when the U.S. interest rate ________ and foreign interest rates are unchanged. The demand curve shifts rightward from D0 to D1 when the expected future exchange rate ________
A) falls; rises B) rises; rises C) falls; falls D) rises; falls E) None of the above answers is correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.