If price elasticity of demand is 2.0, this implies that consumers would
a. buy twice as much of the good if price falls by 10 percent
b. require a 2 percent cut in price to raise quantity demanded of the good by 1 percent
c. buy 2 percent more of the good in response to a 1 percent cut in price
d. require at least a $2 increase in price before showing any response to the price increase
e. buy twice as much of the good if the price drops 1 percent
C
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Which of the following is not a usual consequence of inflation?
A) Income is redistributed among people. B) People are misled into supposing that their earnings have risen substantially. C) People believe that rising prices have made them worse off. D) The cost of living goes up for everyone. E) The value of money falls.
The graphs above show the production possibilities curves for the U.S. and Canada, which both produce cars and wheat. Based on the graphs above, which of the following is true?
A) The U.S. has an absolute advantage in both goods. B) Canada has an absolute advantage in cars. C) The U.S. has a comparative advantage in cars. D) The U.S. has a comparative advantage in wheat.