For complements:
A. price elasticity of income is positive.
B. price elasticity of income is negative.
C. cross-price elasticity of demand is negative.
D. cross-price elasticity of demand is positive.
Answer: C
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If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must
A) harm its terms of trade. B) have no effect on its terms of trade. C) improve its terms of trade. D) decrease its marginal propensity to consume. E) harm world terms of trade.
In the case of a natural monopoly, two firms can produce at lower average cost than one firm can.
Answer the following statement true (T) or false (F)
The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook
A. increased by 25 percent. B. decreased from 1.4 to 1.25. C. increased from 2.4 to 3. D. decreased from 2.4 to 2.0.
Suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? The monopolist has
A. maximized its total revenue. B. set price equal to its average cost. C. equated marginal revenue and marginal cost. D. maximized the difference between marginal revenue and marginal cost.