The cross elasticity of demand for butter and margarine is likely to be

A) positive because they are substitutes.
B) positive because they are complements.
C) negative because they are substitutes.
D) negative because they are complements.
E) positive because they are normal goods.


A

Economics

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To increase its profit, a perfectly competitive firm will produce more output when

A) price is greater than average fixed cost. B) price is greater than marginal cost. C) marginal cost is less than average total cost. D) average variable cost is greater than average fixed cost. E) price is greater than average variable cost.

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If the demand curve is horizontal a rightward shift of the supply curve will lead to

A) an increase in quantity supplied. B) an increase in price. C) a decrease in quantity demanded. D) a decrease in price.

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Suppose the average interest rate on euro bonds is 4%, and the average interest rate on U.S. dollar bonds is 6%. Which should the investor choose?

a. neither-bonds have high default rates. b. both-an investor will choose some euro bonds and some U.S. bonds to diversify. c. the euro bond because their economies are usually more stable. d. It is not possible to answer without information on exchange rates.

Economics