Which of the following shifts aggregate demand to the right?
a. a decrease in the money supply
b. increases in the profitability of capital due perhaps to technological progress.
c. the repeal of an investment tax credit
d. a decrease in the price level
b
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Consider an industry that is in long-run equilibrium. An increase in demand leads to a decrease in the price of the good. We know that this is
A) a decreasing cost industry. B) a constant cost industry. C) an increasing cost industry. D) not a competitive industry.
Which of the following is true with respect to the price elasticity of demand?
a. The coefficient of price elasticity of demand will change with changes in the units of measurement (for instance, going from pounds to ounces). b. Elasticity of demand is equal to the slope of the demand curve. c. Elasticity measures the sensitivity of total expenditure to a change in price of a good. d. Elasticity will tend to be greater for a relatively expensive product than for a cheaper one. e. A coefficient of 1 means that the percentage change in total expenditure is equivalent to the percentage change in price.