A nation's trade deficit will tend to shrink when its
a. economy is expanding.
b. economy is shrinking.
c. investment environment is attractive to foreigners.
d. economy is growing at a normal rate.
B
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We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than one. A one percent change in price therefore causes
A) exactly a one percent change in the quantity demanded. B) a change of less than one percent in the quantity demanded. C) a greater than one percent change in quantity demanded. D) a change that cannot be determined based on one percent.
The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
A) 4 machine-made cigars B) one-quarter of a machine-made cigar C) $10.00 D) $2.50