Explain the concepts of cross-price elasticity of demand and income elasticity of demand. What do positive and negative values indicate for each of these demand elasticities?
What will be an ideal response?
Cross-price elasticity of demand measures the percentage change in quantity demanded of one good based on the percentage change in the price of another good. If cross-price elasticity is positive, the two goods are substitutes. If cross-price elasticity is negative, the two goods are complements.
Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. If income elasticity is positive but less than one, the product is a normal good and a necessity. If income elasticity is positive and greater than one, the product is a normal good and a luxury. If income elasticity is negative, the product is an inferior good.
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If a number greater than the mean of a series of observations is added to the series, the new mean is:
A) smaller than the original mean. B) greater than the original mean. C) same as the original mean. D) either greater or smaller than the original mean depending on the number of observations in the series.
Human beings are generally very good at accurately estimating probabilities
Indicate whether the statement is true or false
Which of the following taxes is least likely to be shifted?
a. a federal excise tax on grapefruit b. a sales tax on some foodstuffs c. a personal income tax d. a state tax on football tickets
Which statement is true?
A. There were more strikes in 1946 than in any other year. B. The Taft-Hartley Act has greatly benefited labor unions. C. Most labor leaders opposed the National Labor Relations Act. D. The Taft-Hartley Act has never been invoked by the president.