The price of A falls by 2 percent, and the quantity demanded of A increases by 2 percent. Meanwhile, the quantity demanded of B increases by 2 percent too. We would conclude that
A) demand for A is elastic, and A and B are substitutes.
B) demand for A is elastic, and A and B are complements.
C) demand for A is unit-elastic, and A and B are complements.
D) demand for A is inelastic, and A and B are unrelated.
Answer: C
You might also like to view...
Good A is a Giffen good. If the price of good A were to suddenly double, the income effect would cause the purchases of good A to increase by
A) more than double. B) exactly double. C) less than double. D) Any of the above are possible. E) none of the above
Jim is haggling with a car dealer over the sale price of a used car. Which of the following would determine the amount of surplus Jim extracts from the purchase?
a. Total difference between the buyer's and seller's valuations of the car b. The number of customers trying to buy that particular car c. The number of sellers trying to make Jim a sale d. All of the above
For a given amount of total reserves, a decrease in required reserves causes an increase in excess reserves.
a. true b. false
In equilibrium, which of the following conditions is common to both unregulated monopoly and pure competition?
A) P = MR B) AR = ATC C) MR = MC D) MC = P