If the cross-elasticity of goods X and Y is negative, then the sales of X move:
A. in the opposite direction as the price of Y, and X and Y are substitute goods.
B. in the opposite direction as the price of Y, and X and Y are complementary goods.
C. in the same direction as the price of Y, and X and Y are complementary goods.
D. in the same direction as the price of Y, and X and Y are substitute goods.
Answer: B
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The rational spending rule is derived from the consumer's desire to:
A. minimize expenditures. B. maximize the number of goods purchased. C. obtain the lowest possible price. D. maximize utility.
A firm's total variable cost will depend on:
A. the level of output. B. the prices of variable resources. C. the production techniques that are used. D. all of these.
Related to the Economics in Practice on p. 429: The value of the fees charged by eBay to sellers who use eBay is
A. only counted in U.S. GDP if the seller is in the U.S. B. never counted in U.S. GDP C. counted in U.S. GDP. D. only counted in U.S. GDP if the product being sold is new.
A personal tax cut of $50 billion will affect income differently than an increase in government spending by $50 billion because
A. households may save part of the additional income from the tax cut. B. the increase in government spending is less expansionary than the increase in taxes. C. the increase in government spending will produce a political business cycle. D. households may consume more than the additional income from the tax cut.