What is the cross-price elasticity of demand? How is it measured?
Cross-price elasticity of demand is a measure of the extent to which a change in the price of one good can shift the quantity demanded for another good. Cross-price elasticity of demand of two goods is calculated by dividing the percentage change in the quantity demanded of one good by the percentage change in the price of another good.
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The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power
A) substitution B) population C) ceteris paribus D) income
The costs in time and effort incurred by people and firms who are trying to minimize their holdings of cash because of inflation are called
A) menu costs. B) shoe leather costs. C) transactions costs. D) imperfect competition costs.
Firms may choose to discriminate in order to reduce information costs associated with screening applicants
a. True b. False Indicate whether the statement is true or false
Which of the following is a normative statement?
a. Fifteen percent of Americans go without health insurance in a year. b. The Consumer Price Index rose three-tenths of one percent in May. c. An increase in the minimum wage will increase teenage unemployment. d. Americans would be better served by single-payer health care system. e. The French trade deficit reached an all-time high last year.