The price elasticity of demand is always positive, as is the price elasticity of supply. Is the cross elasticity of demand always positive? Explain your answer
What will be an ideal response?
No, the cross elasticity of demand is not always positive. The cross elasticity of demand is positive for goods that are substitutes and negative for goods that are complements. Hence the sign of the cross elasticity of demand indicates whether the goods are substitutes or complements.
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If the government increases the income tax rate:
A. disposable income decreases. B. disposable income increases. C. disposable income remains unaffected. D. total income increases.
Angela, Bonnie, and Carl are visiting the local paint store. Angela, owner of Angela's Artful Painting Co, is posting a Help Wanted sign because she is looking for more painters to join her crew. Bonnie, who is a sole proprietor, is placing an order for 12 gallons of green paint. Carl is a painter who is looking for a job and is reading the bulletin board in the paint shop. Who is operating in
the short run? a. Angela and Bonnie b. Angela and Carl c. Angela only d. Bonnie only e. Carl only
For a self-sufficient producer, the production possibilities frontier
a. is the same as the consumption possibilities frontier. b. is greater than the consumption possibilities frontier. c. is less than the consumption possibilities frontier. d. is always a straight line.
When long-run average costs decline as output increases, the firm is experiencing
A) negative returns to scale. B) diseconomies of scale. C) constant returns to scale. D) economies of scale.