A good with a unit elastic demand has a:
A. price elasticity equal to -1.
B. price elasticity greater than 1.
C. perfectly vertical demand curve.
D. perfectly horizontal demand curve.
Answer: A
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When you use a credit card to pay your tuition,
A) you've used the credit card as money because it is a means of payment. B) the credit card is not money but is an ID card for an instant loan. C) the credit card is not money because it involves an electronic transaction. D) the credit card is not money because it is not officially issued by the government. E) you've used the credit card as money because you received something in return.
Which of the following is an example of an autonomous spending change?
A) An increase in investment caused by a technological innovation B) An increase in consumption caused by an increase in interest income C) An increase in tax revenue caused by a rise in GDP D) An increase in saving caused by a rise in income
If MiiTunes and The Rock Shop are both in the music business and faced with the choices outlined in the figure shown, we can predict the outcome will be that:
This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.
A. MiiTunes charges low prices and The Rock Shop does not enter.
B. MiiTunes charges high prices and The Rock Shop enters.
C. MiiTunes charges high prices and The Rock Shop does not enter.
D. MiiTunes charges low prices and The Rock Shop enters.
Some competitive firms are willing to operate at a loss, in the short run, because:
a. their average variable cost is less than the price. b. their fixed costs are less than their current losses. c. their average total cost is less than the price. d. they do not attempt to maximize profits or minimize losses. e. their revenues are at least able to cover their fixed costs.