Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that
A) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good.
B) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good.
C) an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a luxury.
D) an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good.
A
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When there is excess aggregate demand, the appropriate fiscal policy would be for the government to
A. Increase the public debt. B. Make budget deficits larger. C. Make budget surpluses larger. D. Make budget surpluses smaller.
The reason a corporation has retained earnings is to
A) pay unemployment taxes. B) make investments that will increase the value of the stock. C) avoid the double taxation of corporate profits. D) be able to make unemployment payments.
A change in income leads to a ________ that causes a ________.
A. change in demand; movement along the demand curve B. change in quantity demanded; shift of the demand curve C. change in demand; shift of the demand curve D. change in quantity demanded; movement along the demand curve
In both monopolistically competitive and perfectly competitive industries
A) firms produce products for which there are no close substitutes. B) there are high barriers to entry. C) there are many buyers and sellers. D) firms are price takers.