Suppose the price of A increases by 10 percent while the quantity demanded of B does NOT change. We would conclude that
A. the two goods are not related.
B. the two goods are complements, but the cross elasticity of demand is not large.
C. the two goods are perfect substitutes.
D. the two goods are substitutes, but the cross elasticity of demand is not large.
Answer: A
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Direct controls are generally much more costly than emissions taxes because
A. under direct controls emissions cutbacks are usually not apportioned among the firms on the basis of their ability to reduce pollution cheaply and efficiently. B. emissions tax per unit of output is higher than the per-unit direct control program cost. C. government cannot legally levy emissions taxes that are as high. D. firms disregard emissions taxes.
Choice architecture is the:
A. organization of the context and process in which people make decisions. B. choices that force utility-maximizing decisions for individuals. C. political framework under which policy is made. D. the internal mental framework people use in order to make all their decisions.
Moral hazard occurs when
a. an employer closely monitors an employee. b. two people consider a trade with each other and one person has relevant information about some aspect of the product's quality that the other person lacks. c. an employee lacks an incentive to promote the best interests of the employer, and the employer cannot observe the actions of the employee. d. an employee closely monitors the actions of her employer.
Which statement is true?
A. Aid to other countries is the fourth largest spending item in the federal budget. B. Nearly half of federal government spending goes for direct payments to individuals. C. Over half of all federal tax receipts comes from the personal income tax. D. Defense spending per capita is less than most other industrial countries.