If two goods are complementary, the cross elasticity will be negative
Indicate whether the statement is true or false
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Which of the following is a likely result of the deregulation of the airline industry that might benefit consumers?
a. a wage increase for union pilots b. a possible decline in airline safety c. one firm's emerging as an unregulated monopoly d. loss of service to unprofitable routes e. a decrease in air fares
You may be unwilling to buy a used car because you suspect the last owner found out the car was a lemon. You may treat a car you rented with a little less care than you would use on your own car
a. Both examples primarily illustrate adverse selection. b. Both examples primarily illustrate moral hazard. c. The first example primarily illustrates adverse selection; the second primarily illustrates moral hazard. d. The first example primarily illustrates moral hazard; the second primarily illustrates adverse selection.
Refer to the diagrams in which figures (a) and (b) show demand curves reflecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. If the marginal cost of the optimal quantity of this public good is $10, the
optimal quantity must be:
A. 1 unit.
B. 2 units.
C. 3 units.
D. 4 units.
If the price of a good increases, the substitution effect will:
A. Always tend to make the quantity decrease, while the income effect could go either way B. Always tend to make the quantity increase, while the income effect could go either way C. Go either way, but the income effect will always make the quantity increase D. Go either way, but the income effect will always make the quantity decrease