Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week:
A. demand will become more price elastic.
B. price elasticity of demand will not change as price is lowered.
C. demand will become less price elastic.
D. the elasticity of supply will increase.
C. demand will become less price elastic.
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The Clayton Act:
A) was passed in 1985 over the objections of then President Reagan. B) outlaws racial discrimination in the practice of business. C) outlaws the ownership of stock by the U.S. government unless it is in public enterprises. D) outlaws price discrimination unless based on cost differences.
Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target. If the commitment is credible, then
A) the public's expected inflation will remain unchanged. B) the short-run aggregate supply curve will not shift. C) over time inflation will fall back down to the inflation target. D) all of the above. E) both A and B.