Price elasticity of demand is defined as the ratio of the:
a. percentage increase in price to an increase in quantity demanded.
b. unit change in quantity demanded to the dollar change in price.
c. maximum amount that consumers will pay to increase quantity.
d. percentage change in quantity demanded to the percentage change in price, other things being equal.
d
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If products C and D are close substitutes, an increase in the price of C will
A. tend to cause the price of D to decrease. B. shift the demand curve for D to the right. C. shift the demand curves for both products to the right. D. shift the demand curve for C to the left and the demand curve for D to the right.
A mutually advantageous trade leads a Pareto improvement
a. True b. False
The cross-price elasticity of demand for generic brand pasta, an inferior good, would be expected to be less than zero
Indicate whether the statement is true or false
Money allows dissimilar goods and services to be valued according to a single common denominator—a nation's basic monetary unit, such as the dollar. Which of the following represents this function?
A. Medium of exchange B. Store of value C. Standard of value D. Standard of deferred payment