Answer the following statements true (T) or false (F)
1. An increase in consumer incomes will cause a decrease in the demand for an inferior good.
2. Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.
3. If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.
4. The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will decrease.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
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A positive value for the cross elasticity of demand between two good implies that these two goods are substitutes.
Answer the following statement true (T) or false (F)
The lack of investment in developing countries is at least in part attributable to:
A. high levels of foreign aid. B. low levels of domestic savings. C. inappropriate education. D. overpopulation.
Figure 12.8 depicts an advertising game between two stores. "No advertising" is:
A. a dominant strategy for Store A but not for Store B. B. a dominant strategy for Store B but not for Store A. C. a dominant strategy for both stores. D. a dominant strategy for neither store.
Refer to the information provided in Figure 6.5 below to answer the question(s) that follow.
Figure 6.5Refer to Figure 6.5. Molly's budget constraint is CD. If her income increases, her new budget constraint is
A. EF. B. AD. C. BD. D. It is not shown on this graph.