If two goods have a cross elasticity of demand of -2, then when the price of one good increases, the demand curve of the other good
A) shifts rightward.
B) shifts leftward.
C) remains unchanged and the supply curve also remains unchanged.
D) might shift rightward, leftward, or remain unchanged.
E) remains unchanged but the supply curve shifts leftward.
B
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Financial intermediaries reduce the costs of negotiation by
A) investing in a large number of projects with independent returns. B) gaining expertise in evaluating and monitoring investments. C) investing in a small number of projects with independent returns. D) pooling funds.
The decision to make the U.S. income tax system progressive was
A) a positive decision. B) a normative decision. C) a decision that was needed to minimize the excess burden of taxation. D) a progressive decision.
A major employer in a small town announces upcoming major layoffs of employees. What should we expect to happen to the consumption functions of the affected employees?
a. the consumption functions will shift upward. b. most employees will move upward along their consumption functions c. the consumption functions will shift downward d. most employees will move downward along their consumption functions
Demand-side market failures occur when:
A. the demand and supply curves don't reflect consumers' full willingness to pay for a good or service. B. the demand and supply curves don't reflect the full cost of producing a good or service. C. government imposes a tax on a good or service. D. a good or service is not produced because no one demands it.