Which of the following best illustrates the mutual interdependence among firms in the airline industry? A) The considerable efforts made by the various competitors to coordinate fare increases. B) The unwillingness of individual firms to match increased amenities offered by other firms. C) The substantial profits airlines have earned over the past several years. D) […]
Assuming that C = $4,500, I = $1,000, G = $1,200, Exports = $450, Imports = $550, Depreciation = $600, and Indirect Business Taxes = $500 (all in billions of dollars), GDP equals: A) $5,500 billion. B) $6,000 billion. C) $6,400 billion. D) $6,600 billion. ANSWER D
At a price of $5, consumers buy 200 units of good X. When the price falls to $4, quantity demanded increases to 250 units. We can conclude that over this range, demand is: A) elastic. B) unit elastic. C) inelastic. D) perfectly inelastic. ANSWER B
Assume that when the price of good Z is increased from $5 to $6, the total revenue earned increases from $600 to $690. Based on this information, we can conclude that over this range, demand for Z is: A) elastic. B) unit elastic. C) inelastic. D) perfectly inelastic. ANSWER C
The last time the U.S. Post Office raised its prices for mail service critics of the rate increase argued that the Post Office’s revenues would actually decline as a result of the price increase. It can be concluded that: A) both groups believe demand is elastic, but for different reasons. B) both groups believe demand […]
The type of policy that involves interest rates and the availability of loanable funds is known as: A) fiscal policy. B) monetary policy. C) strategic financial policy. D) federal policy. ANSWER B
Over the past few years, airlines have tended to compete in the market for intercontinental business class travelers on the basis of: A) price. B) cost. C) timeliness of their flight schedules. D) amenities. ANSWER D
The type of policy that involves changes in taxes or spending by the federal government is known as: A) fiscal policy. B) monetary policy. C) strategic financial policy. D) federal policy. ANSWER A
Which of the following is not considered to be a determinant of the price elasticity of demand for a particular good? A) The number of available substitutes. B) The cost of the good relative to total income. C) The quantity of the good that is supplied to the market. D) The time period under consideration. […]
An increase in price will result in an increase in total revenue if demand is: A) perfectly elastic. B) relatively elastic. C) inelastic. D) unit elastic. ANSWER C
