Answer the following questions true (T) or false (F)
1. The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.
2. If the price of peaches, a substitute for plums, decreases the demand for plums will increase.
3. An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.
1. FALSE
2. FALSE
3. FALSE
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Which of the following items has the largest price elasticity of demand?
A) food B) fruit C) oranges D) oranges from a Wal-Mart SuperCenter
In the prisoner's dilemma game, the sentence that each player receives depends on
a. neither strategy chosen b. only the strategy the player chooses c. only the strategy the other player chooses d. the strategy the player chooses and on the strategy the other player chooses e. None of the answers is correct.
Generally, we calculate elasticity as the
A. percentage change in price divided by the percentage change in quantity demanded/ supplied
b. percentage change in quantity demanded/ supplied divided by the change in price
c. percentage change in quantity demanded/ supplied divided by the percentage change in price
d. change in quantity demanded/ supplied divided by the change in price
The Folk Theorem says that anything can happen in infinitely repeated games.
Answer the following statement true (T) or false (F)