One reason the AD curve is downward sloping is the __________ effect
A) wage rate
B) productivity
C) interest rate
D) structural
E) none of the above
C
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The return to investment in human capital is observed
a. only when workers are assigned identical tasks. b. in the wage differential between workers. c. in the high school dropout rate in inner-city urban school districts. d. in the low wages of educated factory workers.
An article in the Wall Street Journal noted the following: Instead of relying on a full-coach, round-trip unrestricted fare of about $2,000 between Cleveland and Los Angeles ...Continental [Airlines] since June has offered a $716 unrestricted fare in
that market .... Through October, the test resulted in about the same revenue that Continental thinks it would have collected with its higher fare. Source: Scott McCartney, "Airlines Try Cutting Business Fares, Find They Don't Lose Revenue," Wall Street Journal, November 22, 2002. What is the absolute value of the price elasticity of demand on this airline route? A) 0 B) less than 1 C) greater than 1 D) approximately 1