Even though airfares have been increasing, the revenue earned by airlines has declined. Based on this statement, what may be concluded about price, cross-price, or income elasticity of demand?
What will be an ideal response?
The statement suggests that the price elasticity of demand for airlines is price elastic.
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If fair insurance is offered to a risk-averse person, she will
A) buy enough insurance to eliminate all risk. B) not buy any insurance because it is overpriced. C) not buy any insurance since the marginal utility of the amount of the payment is positive. D) buy enough insurance to cover about half of the possible loss.
If technological breakthroughs in the computer and software industries cause large numbers of firms to consider investment projects they hadn't previously thought of,
A) the supply of loanable funds will shift rightward. B) the supply of loanable funds will shift leftward. C) the demand for loanable funds will shift rightward. D) the demand for loanable funds will shift leftward. E) an excess demand for loanable funds emerges and persists.