Suppose that when the price of root beer rises 1%, the quantity of hotdogs demanded falls 0.5%. This would mean that hotdogs and root beer are
A) substitutes, with a cross price elasticity of 0.5.
B) complements, with a cross price elasticity of -0.5.
C) substitutes, with a cross price elasticity of -2.0.
D) complements, with a cross price elasticity of -2.0.
Answer: B
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In the long run, a firm in monopolistic competition will
A) make a negative economic profit, that is, an economic loss. B) make zero economic profit, that is, a normal profit. C) make a positive economic profit. D) None of the above answers is necessarily correct because the amount of the profit or loss depends on the slope of the demand curve.
Why is prediction in social sciences like economics more difficult than in physical sciences?
A unit of account is
A) anything that is generally accepted in exchange for goods and services. B) a common measurement in which relative values are expressed. C) an item's ability to hold value over time. D) the exchange of goods and services for other goods and services. E) both a and d
You are the manager of a gas station and your goal is to maximize profits. Based on your past experience, the elasticity of demand by Texans for a car wash is ?4, while the elasticity of demand by non-Texans for a car wash is ?6. If you charge Texans $20 for a car wash, how much should you charge a man with Oklahoma license plates for a car wash?
A. $18.00 B. $15.00 C. $1.50 D. $20.00