For unlimited access to Class Notes, a Class+ subscription is required.
With a marginal propensity to save of .4, the marginal propensity to consume will be:
A. 1.0 minus .4.B. .4 minus 1.0.C. the reciprocal of the MPS.D. .4.
10. Suppose the price of frozen bananas increases from $2 to $4. What is the price elasticity of demand for frozen bananas? (a) 3/4 (b) 2/3. (c) 4/3. (d) 4/5.
11. a) b) c) d) e) Suppose that Demand is linear, as follows: P = 100 -0.50. At P= $20, the price elasticity of demand is: - 1/4 1/4* -4 4. None of the above.
