The cross elasticity of demand for complementary goods must
a. be greater than one
b. be less than one
c. be zero
d. exceed zero
e. be negative
E
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If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:
a. a 40% increase in purchases by customers. b. a 40% decrease in purchases by customers. c. a 2.5% increase in purchases by customers. d. a 2.5% decrease in purchases by customers.
Refer to the scenario above. Which of the following strategy combinations denote a Nash equilibrium?
A) (Left, Left) B) (Left, Right) C) (Right, Left ) D) (Right, Right)
Aggregate supply changes much faster than aggregate demand
Indicate whether the statement is true or false
We assume leisure is a normal good. This implies that
A) an increase in taxes decreases the demand for leisure. B) households maximize utility. C) preferences over consumption are well defined. D) an increase in the wage increases demand for leisure.