If the price elasticity of demand is 0.5, then a 10% increase in price results in a
A) 5% decrease in total revenues.
B) 5% decrease in quantity demanded.
C) 0.5% decrease in quantity demanded.
D) 5% increase in quantity demanded.
E) 50% reduction in quantity demanded.
Ans: B) 5% decrease in quantity demanded.
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Refer to the above figure. Suppose point A is the original equilibrium. If there is an increase in the money supply, the new long-run equilibrium is given by point
A) A. B) B. C) C. D) D.
Three variables are related and two of them are plotted in a figure. If the variable that is not measured on either the x-axis or the y-axis changes, then there is
A) a movement along the drawn curve. B) no impact on the curve because the variable is not measured on either of the axes. C) a shift in the curve. D) either a shift in the curve or a movement along the curve, but more information is needed to determine which. E) None of the above answers is correct.