Suppose a local bookstore notices that a 2 percent increase in book prices leads to a 2 percent decrease in the number of books sold. Which of the following is true?
a. Demand for books is price elastic.
b. The store's sales revenue did not change.
c. Demand for books is price inelastic.
d. Demand for books is perfectly inelastic.
e. The bookstore could increase revenue by further lowering prices.
B
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According to your text, the "market economy" can best be understood as
A) an institution created by British merchants around the time of Smith's Wealth of Nations. B) an extremely complex institution that emerged out of individuals specializing and trading among each other. C) an institution unique to America. D) an institution that could not exist in the absence of regulation.
Suppose you have two investments to choose from:
1, A one-year $20,000 zero coupon bond 2, A two-year $20,000 zero coupon bond What is the difference between the prices of these bonds if the interest rate rises from 4% to 5%? A) You would lose $167.39 more on the two year bond. B) You would lose $167.39 more on the one year bond. C) You would gain $350.54 more on the two year bond. D) You would lose $183.15 more on the one year bond.