Which of the following statements is true?
A) If marginal costs are constant, then it is optimal to advertise until the last dollar spent on advertising generates one additional dollar of sales.
B) If the demand curve shifts leftward as the advertising expenditure increases, then the advertising elasticity of demand is positive.
C) If the advertising elasticity of demand declines and consumer demand becomes more price elastic, then the optimal advertising-to-sales ratio declines.
D) If the advertising elasticity of demand is positive, then the demand curve must be upward sloping.
C
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At full employment, actual ________ equals ________
A) real GDP; potential GDP B) real GDP; nominal GDP C) unemployment; zero D) potential GDP; nominal GDP E) nominal GDP; potential GDP
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1. B. P4 and Y2. C. P5 and Y1. D. P5 and Y2.