Jonah lives in a small town where there is only one Mexican restaurant. Which of the
following is likely to be true about the price elasticity of demand for meals at the
Mexican restaurant?
A) Demand is likely to be perfectly inelastic.
B) Demand is likely to be perfectly elastic.
C) Demand is likely to be relatively elastic.
D) Demand is likely to be relatively inelastic.
Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,
the quantity demanded falls from 800 to 600 reams per day. Using the midpoint
formula, what is the price elasticity of demand (in absolute value) over this range?
A) 0.003
B) 0.41
C) 2.43
D) 4
At low wages, the labor supply curve for most people slopes upward because
A) the supply of labor is perfectly inelastic at low wages.
B) as wages increase the opportunity cost of leisure increases.
C) as wages increase income also increases unless hours worked decrease.
D) the demand for labor is perfectly elastic at low wages.
An increase in the real interest rate does which of the following?
A) reduces the demand for loanable funds
B) reduces saving
C) reduces consumption spending
D) increases the demand for loanable funds
An increase in taxes will ________ consumption spending, and a decrease in transfer
payments will ________ consumption spending.
A) increase; increase
B) decrease; increase
C) increase; decrease
D) decrease; decrease
Figure 15-16 Figure 15-16 shows the
market demand and cost curves facing a natural monopoly.
If the regulators of the natural monopoly allow the owners of the firm to break even on
their investment, the firm will produce an output of ________ and charge a price of
________.
A) Q1 units; P4
B) Q1 units; P1
C) Q5 units; P3
D) Q3 units; P3
Disposable personal income is defined as
A) personal income less personal taxes plus indirect sales taxes.
B) personal income less transfer payments plus personal taxes.
C) personal income less personal taxes.
D) personal income less depreciation.
In May 2012, Facebook stock sold for $38 per share in its initial public offering (IPO).
More than a year later, in June 2013, the value of Facebook stock
A) had more than doubled in price.
B) had declined by nearly 40 percent from the IPO price.
C) languished at the same $38 per share price.
D) had increased by almost 60 percent from the IPO price.
Figure 4-8
Figure 4-8 shows the market for beer. The
government plans to impose a unit tax in this market. For each unit sold, the price
sellers receive after the tax (net of tax) is
A) $20.
B) $22.
C) $27.
D) $32.
The financial success of the movies The Lion King and Toy Story led to
A) a decrease in the salaries of animators and an increase in the number of animators
used to produce films.
B) an increase in demand for actors to play roles in animated films.
C) the Disney studio’s attempt to buy Pixar Animation Studios.
D) a reduction in the price of computers and software relative to the price of labor
(animators) used to produce animated films.