When would demand for a good be more inelastic?
a) when there are fewer available substitutes
b) when the time period is considered longer
c) when the good is considered more of a luxury good
d) when the market is more narrowly defined
Ans: a) when there are fewer available substitutes
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The CPI was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 1.4 percent. What was the real interest rate during this period?
A) 4.6 percent B) -1.8 percent C) -3.2 percent D) 3.2 percent E) 1.8 percent
When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,
a. buyers of the good will bear most of the burden of the tax. b. sellers of the good will bear most of the burden of the tax. c. buyers and sellers will each bear 50 percent of the burden of the tax. d. the effective price paid by buyers will decrease as a result of the tax.