Suppose the quantity demanded of ice cream cones increases from 400 to 425 cones a day when the price is reduced from $1.50 to $1.25. In this situation, the elasticity of demand, calculated using the average method, is

A person should consume more of something when its marginal:

A. benefit exceeds its marginal cost. B. cost exceeds its marginal benefit. C. cost equals its marginal benefit. D. benefit is still better.

Which would be an example of a negative side effect of pay for performance plans?

A. Profit sharing plans will tend to decrease the "free-ride" that some workers get by being part of a team B. Employers get greater effort from workers by paying them a relatively high, above-equilibrium wage C. Workers have to take additional schooling to learn skills that will enable them to keep their jobs D. An increase in production from piece work can result in a decline in product quality