Which of the following statements is true?
a. If the income elasticity of demand is less than zero, the good is an inferior good.
b. Only if the demand curve is vertical will sellers raise the price by the full amount of a tax.
c. Two goods are substitutes if the cross-elasticity of demand coefficient is positive.
d. A price elasticity of supply coefficient equal to 1.5 means the product exhibits an elastic supply and a 10 percent increase in the price will increase the quantity supplied by 15 percent.
e. All of these.
e
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Autonomous consumption is defined as
A) the level of real consumption spending that is independent of real disposable income. B) the real consumption spending by the autonomous government. C) the level of real consumption spending that is equal to real disposable income. D) the consumption of foreign-made goods independent of exchange rates.
Which of the following would most likely be classified as a natural monopoly?
A) a city water district B) Microsoft C) Disneyland D) Exxon-Mobil
The price of migraine medicine increased by 6%, causing a 1% increase in quantity supplied. Price elasticity of supply
a. is 6. b. is 167. c. is 1. d. cannot be determined.
In analyzing the gasoline tax and subsidy policy discussed in the text, the final solution illustrates that
A. the government is made better off financially. B. consumers do not cut back on fuel consumption. C. consumers are worse off than they were before the policy began. D. social welfare increases.