Suppose that the cross price elasticity of demand between good A and good B is -1.2. This indicates that the two goods are
A. complements.
B. substitutes.
C. both inferior.
D. completely unrelated in the minds of consumers.
Answer: A
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A monopolist is the sole supplier of a good or service for which there are no close substitutes
Indicate whether the statement is true or false
The market price in a perfectly competitive industry is $13 . A firm is considering increasing its output from 30 units to 40 units. The marginal revenue of each of these extra units equals
a. $13 b. $130 c. $390 d. $520 e. $130
Exhibit 8-11 A firm's cost and marginal revenue curves
In Exhibit 8-11, when the price is $5, the firm:
A. is making an economic profit of $21. B. should produce output equal to 10. C. is breaking even. D. should produce output equal to 7.
If the demand for cigarettes is inelastic,
A. A price reduction will actually cause the quantity demanded to fall. B. No matter how high the price goes, the quantity demanded will not fall. C. Total revenue will fall if the price of cigarettes rises. D. Total revenue will rise if the price of cigarettes rises.