If beef and pork are substitutes for consumers, the cross elasticity of demand between the two products must be
A) negative.
B) positive.
C) indeterminate.
D) elastic.
E) greater than 1.
B
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Your roommate is having trouble grasping how monetary policy works. Which of the following explanations could you use to correctly describe the mechanism by which the Fed can affect the economy through monetary policy? Increasing the money supply
A) causes people to spend more because they know prices will rise in the future. B) lowers the interest rate, raises the value of the dollar, lowers the prices of exports, and raises net exports. C) lowers the interest rate, and firms increase investment spending. D) raises the interest rate and consumers decrease spending on durable goods.
Generalizing using statistical discrimination is:
A. an irrational response and always leads to loss of surplus. B. a rational response to being on the wrong end of an information asymmetry. C. a rational response, although government always steps in to prevent it. D. All of these statements are true.
The signals that guide the allocation of resources in a market economy are
a. surpluses and shortages. b. quantities. c. government policies. d. prices.
All else constant, an increase in the supply of
A) increases the equilibrium quantity and the equilibrium price of bonds. B) increases the equilibrium quantity and decreases the equilibrium price of bonds. C) decreases the equilibrium quantity and increases the equilibrium price of bonds. D) decreases the equilibrium quantity and the equilibrium price of bonds.