If the price of butter increases 5 percent and the amount of margarine purchased increases 25 percent, then the cross-price elasticity of these goods is:
A. 0.2.
B. 5.
C. -0.2.
D. -5.
Answer: B
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In the circular flow model of an economy, households
A) receive income from buyers of goods and services. B) receive income from the sale of factors in the goods markets. C) pay firms for the use of their factors. D) receive income from producers for the use of factors in the factor markets.
The immediate (two-day) exchange of one currency for another is a
A) forward transaction. B) spot transaction. C) money transaction. D) exchange transaction.
Money that some authority, generally a government, has ordered to be accepted as a medium of exchange is called _______ money.
A) fiat B) intrinsic C) commodity D) debt
An decrease in Italy's interest rate and an decrease in Italy's price level relative to U.S. price level have the same effect on the exchange rate between the two countries.
Answer the following statement true (T) or false (F)