For which of the following is demand likely to be the most price elastic?
a. a good for which there are no close substitutes
b. a good for which there are no easily-obtained substitutes
c. a good with close substitutes that are difficult to obtain
d. a good that is no longer being produced
e. a good for which close substitutes are easily obtained
E
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If the tax multiplier is -1.5 and a $200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.)
A) a $300 billion decrease in GDP B) a $30 billion increase in GDP C) a $300 billion increase in GDP D) a $133.33 billion increase in GDP E) a $133.33 billion decrease in GDP
Sam needs to have his car serviced. There is an auto repair shop located nearby that does a lot of business and has an online rating of 4 out of 5 stars. Sam takes his car to be serviced and thinks the service person is grumpy and that his car is still not running as well as it could be. Sam then makes a point of telling his friends not to use the repair shop. Sam's actions illustrate which of
the following systematic mistakes that people make when making decisions? a. People are overconfident. b. People give too much weight to a small number of vivid observations. c. People are reluctant to change their minds. d. All of the above are correct.