Firm A producing one good acquires another firm B producing another good. The cross price elasticity of demand for the goods owned by each firm is -1.4 . Holding other things constant, the acquiring firm should
a. Raise prices on both goods
b. Lower prices on both goods
c. Raise price on the acquired good only
d. Need more information
b
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If a toy costs 30 yuan in China, how much will it cost in dollars, if the exchange rate is 6 yuan per dollar?
What will be an ideal response?
When Gabriel made a rational choice to spend his entire allowance on candy bars, he did so by comparing the
A) benefits of the candy bars to the desires he had for the candy bars. B) marginal benefits of the candy bars to the marginal costs of the candy bars. C) opportunity costs of the candy bars to the scarcity of the candy bars. D) benefits of the candy bars to the scarcity candy bars. E) self-interest to the social interest.
Inflation is an economic problem because it
A) leads inevitably to unemployment. B) makes prices less useful as signals for resource allocation. C) leads to recession. D) results in rapid increases in the money supply.
The price elasticity of demand for Rosie's Roses fresh flowers the week of Valentine's Day is 1.10 and is 1.60 other days of the year. If Rosie's Roses faces a constant marginal cost of $0.75 per rose, what is the profit-maximizing off-peak load price to charge on days not on the week of Valentine's Day?
A) $2.00 B) $5.00 C) $8.50 D) $1.25