Cross-price elasticity of demand is
A. negative for substitute goods.
B. positive for general goods.
C. negative for complementary goods.
D. unitary for secondary goods.
Answer: C
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Other things equal, an increase in corporate income taxes will ________ the after-tax profitability of investment projects, which leads to ________ in output and employment
A) increase; an increase B) increase; a decrease C) decrease; an increase D) decrease; a decrease
If the elasticity of substitution of a production function is equal to zero, then this production function is a
A) linear production function B) fixed proportion production function C) Cobb-Douglas production function D) None of above.
Graphically, market supply for a product:
A. is the horizontal difference of the individual supply curves. B. is the horizontal sum of the individual supply curves. C. is the vertical difference of the individual supply curves. D. is the vertical sum of the individual supply curves.
Figure 7.2 shows a monopolist's demand curve. Suppose that the marginal cost is $6 for all units and the current output level is 4 units. Then what would you recommend to the firm?
A. Lower the price to sell more units. B. Raise the price and sell fewer units. C. Maintain the current price and output level. D. There is not sufficient information.