The cross elasticity of demand for good A with respect to good B is 0.2 . A 10 percent change in the price of good B will lead to a ____ percent change in the quantity of good A demanded. Goods A and B are _______
A. 2; substitutes
B. 0.5; complements
C. ?2; complements
D. ?0.5; substitutes
A The change in the quantity of good A demanded is computed as (0.2) × (10 percent), which is 2 percent; the cross price elas-ticity is positive, so the goods are substitutes.
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A) incentive problem. B) coordination problem. C) correspondence problem. D) scarcity problem.
If two goods are perfect complements, the shapes of the indifference curves are
A) bowed toward the origin. B) bowed away from the origin. C) straight lines. D) right-angled lines.
Ceteris paribus, an increase in the government's budget deficit will decrease the financial account surplus
Indicate whether the statement is true or false