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Author Question: The price of a new toy increases from 5 to 7 and the quantity demanded decreases from 12,000 to ... (Read 175 times)

jjjetplane

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on: Jun 30, 2018
The price of a new toy increases from 5 to 7 and the quantity demanded decreases from 12,000 to 6,000 per month as a result. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:
 a. 0.5, indicating relatively elastic demand.
  b. 0.5, indicating relatively inelastic demand.
  c. 2.0, indicating relatively elastic demand.
  d. 2.0, indicating relatively inelastic demand.

Question 2

Suppose you found 10,000 hidden under a rock and deposited it in a demand deposit account at your bank. If the reserve requirement was 10 percent, your deposit would initially add ____ to total demand deposits and over time increase the money supply by a maximum of ____.
 a. 10,000; 100,000
  b. 10,000; 90,000
  c. 1,000; 90,000
 d. 1,000; 9,000


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srodz

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Reply #1 on: Jun 30, 2018
Answer to Question 1

c

Answer to Question 2

a


jjjetplane

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Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

Liddy

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Reply 3 on: Yesterday
Wow, this really help

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