Jill consumes nothing but soup and cola. It is possible that both soup and cola are necessities for Jill
Indicate whether the statement is true or false
False. The weighted sum of income elasticities must add up to one. This implies that at least one income elasticities must be >1. Intuitive response — if income rises, the weighted percentage increase in consumption cannot exceed the percentage increase in income without violating the budget constraint.
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The price elasticity of demand for a good produced by a monopolist
A) equals zero as long as the good has no close substitutes. B) is always inelastic since the demand curve slopes down. C) does not equal zero because there will always be some substitutes, however imperfect they may be. D) does not equal zero because every good has at least one good substitute for it.
Variable costs are:
A. costs that don't depend on the quantity of output produced. B. costs that depend on the quantity of output produced. C. one-time costs. D. None of these is true.
Refer to the following figure. When price is $5 and quantity demanded is 3,000, what is the point elasticity of demand?
A. -1 B. -3 C. -1/3 D. -2/3 E. -5
Management and a labor union are bargaining over how much of a $50 surplus to give to the union. The $50 is divisible up to one cent. The players have one shot to reach an agreement. Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer. Both players get zero if the total amounts asked for exceed $50. Which of the following is a perfect equilibrium?
A. Management requests $25, and the labor union accepts $25. B. Management requests $0, and the labor union accepts $50. C. Management requests $49.99, and the labor union accepts $0.01. D. None of the answers is correct.