Adam Smith used the metaphor of the "invisible hand" to explain how
A) business owners are benevolent.
B) markets mismatch buyers and sellers.
C) people acting on their own self-interest promote the interest of society as a whole.
D) the production possibilities frontier illustrates efficient outcomes.
C
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A budget constraint is a straight line because:
A) the tastes and preferences of the consumer change along the constraint. B) a consumer faces a fixed price of both goods that do not change with changes in consumption. C) the opportunity cost of buying each of the goods changes along the constraint. D) a consumer has a limited money income.
When the price elasticity of demand for a good is 1.5, this means that a 1 percent change in price creates a ______ in quantity demanded
a. 0.1 percent increase b. 1.5 percent decrease c. 1.5 percent increase d. 15 percent increase e. 15 percent decrease