If a 20 percent increase in the price of a good results in a 60 percent increase in the demand for another good, what is the cross-price elasticity of demand?
a. +3
b. –3
c. +80
d. –40
a. +3
You might also like to view...
During the American Revolution, Washington’s army nearly starved to death after price controls were enacted to “help” buy food for the army at affordable prices. The Continental Congress later passed a law that
A. exhorted the public to obey the law and help supply food to the army. B. passed tax increases to punish those who refused to sell the food. C. revised the American Law of Supply and Demand. D. overrode local ordinances and essentially repealed the price controls. E. called for the repeal of other price control measures.
After a temporary beneficial supply shock hits the economy, general equilibrium is restored by
A) a shift down and to the left of the IS curve. B) a shift to the left of the FE line. C) a shift up and to the left of the LM curve. D) a shift down and to the right of the LM curve.
In the short run, a firm should shut down its operation if:
a. its losses are less than TFC at the MR = MC point. b. its losses equal TFC at the MR = MC point. c. its losses are greater than TFC at the MR = MC point. d. TR is less than TC. e. TR exceeds TVC.
Government transfer payments are a good example of an automatic stabilizer
a. True b. False Indicate whether the statement is true or false