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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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.
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