We would expect the cross elasticity of demand for Pepsi to be greater in relation to other soft drinks than that for soft drinks in general because:
A. soft drinks are normal goods.
B. the income effect always exceeds the substitution effect.
C. there are fewer good substitutes for soft drinks as a whole than for Pepsi specifically.
D. there are more good substitutes for soft drinks as a whole than for Pepsi specifically.
Answer: C
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Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product, to answer the next question.
If the economy is opened to free trade, the price and quantity of this product sold would be
A. Pa and z. B. Pc and v. C. Pc and z. D. Pt and y.
The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?
A) less than $27 per game B) $27 per game C) more than $27 per game. D) More information is needed to determine if the price is more than, less than, or equal to $27 per game.
What characteristics distinguish private goods from public goods?
If interest rates in Canada rise above those in the rest of the world, then
a. the demand for Canadian dollars decreases b. exports from Canada to other countries increases c. imports into Canada from other countries decreases d. it raises Canada's exchange rate and this may result in a deficit on Canada's current account e. the balance of payments becomes negative