If the cross-price elasticity of demand is positive, then the
a. two goods are complements
b. two goods are substitutes
c. two goods have no relationship to each other
d. price is below the equilibrium
e. price is above the equilibrium
B
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According to the economic way of thinking, alcohol prohibition in the U.S
A) effectively destroyed peoples' incentives to produce and drink liquor. B) abolished the supply and demand process in liquor. C) led to a surge in prices and considerable profit opportunities for people willing to break the law. D) failed to make liquor truly illegal.
In a perfectly competitive industry, if TR exceeds TC, then in the long run
a. firms will exit the industry. b. new firms will enter the industry. c. there will be no change in the number of firms. d. the market supply will shift to the left.
Jonathan sells tacos in the main plaza of a town in Idaho. There are three other vendors in the other corners of the plaza selling tacos of the same quality. If the market demand for tacos decreases in such a way that Jonathan's total revenue is less than his total cost, he will: a. raise the price of tacos to increase his revenue. b. reduce costs to increase his profit margin
c. shut down his business immediately. d. produce the quantity that minimizes his losses.
If a single firm in a price-taker market lowers its price below the market equilibrium price,
a. it will get a larger share of the market. b. it will lose revenue without increasing the quantity it can sell. c. other firms will lower their prices. d. other firms will be driven out of the industry.