Suppose that when the price of root beer rises 10%, the quantity of pizza demanded falls 5%. This would mean that pizza and root beer are
A) substitutes, with a cross price elasticity of 0.5.
B) complements, with a cross price elasticity of -0.5.
C) substitutes, with a cross price elasticity of -2.0.
D) complements, with a cross price elasticity of -2.0.
B
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Kristen has an income of $450 per year to spend on music CDs and movies on DVDs. The price of a CD is $15 and the price of a DVD is $22.50. The indifference curves in the figure above (I1, I2, and I3 ) reflect Kristen's preferences
What is Kristen's best affordable combination of DVDs and CDs? A) 10 DVDs and 15 CDs per year B) 15 DVDs and 12 CDs per year C) 12.5 DVDs and 12 CDs per year D) 5 DVDs and 18 CDs per year
Refer to Table 2-13. What is Tammi's opportunity cost of bathing a cat?
A) two groomed dogs B) one and a half groomed dogs C) two-thirds of a groomed dog D) half a groomed dog
The Open Market Trading Desk is
A) another name for the Federal Open Market Committee. B) an organization of private traders in government securities. C) the area on the floor of the New York Stock Exchange set aside for bond trading. D) a group of private securities traders that the Fed has selected to participate in open market operations.
If the government sets a specific tax and an ad valorem tax so that they raise the same amount of tax revenue, why does the ad valorem tax reduce output less than the specific tax?
What will be an ideal response?