Which of the following statements is true?
a. If the income elasticity of demand is less than zero, the good is an inferior good.
b. Only if the demand curve is vertical will sellers raise the price by the full amount of a tax.
c. Two goods are substitutes if the cross-elasticity of demand coefficient is positive.
d. A price elasticity of supply coefficient equal to 1.5 means the product exhibits an elastic supply and a 10 percent increase in the price will increase the quantity supplied by 15 percent.
e. All of these.
e
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If the Fed purchases securities in the amount of $100,000 from First Union Bank, then the
A) liabilities of First Union decrease by $100,000. B) assets of First Union Bank change in composition but not in amount. C) assets of the Fed decrease by $100,000. D) liabilities of the Fed change in composition but not in amount. E) assets of First Union Bank decrease by $100,000.
A perfectly competitive firm initially is earning zero economic profit. Then, a decrease in demand for the firm's product occurs. Of the following, in the long run which action listed below is the firm most likely to take?
A) Increase the quantity it produces. B) Increase its advertising to increase the demand for its product. C) Exit the market. D) Increase the size of its plant.