If a person takes an action if, and only if, the extra benefits from taking that action are at least as great as the extra costs, then that person is:
A. following the Cost-Benefit Principle.
B. not following the Cost-Benefit Principle.
C. following the Scarcity Principle.
D. not rational.
Answer: A
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The price of a new toy increases from $5 to $7 and the quantity demanded decreases from 12,000 to 6,000 per month as a result. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:
a. 0.5, indicating relatively elastic demand. b. 0.5, indicating relatively inelastic demand. c. 2.0, indicating relatively elastic demand. d. 2.0, indicating relatively inelastic demand.
The dissolving of the _____________ in 1991 resulted in a "peace dividend" for the United States that enabled us to divert tens of billions of dollars a year from military spending to much more productive uses.
Fill in the blank(s) with the appropriate word(s).