question
A supply curve that is a vertical straight line indicates that:
answer
a change in price will have no effect on the quantity supplied.
question
Assume that a 3 percent increase in income across the economy produces a 1 percent decline in the quantity demanded of good X. The coefficient of income elasticity of demand for good X is:
answer
negative and therefore X is an inferior good.
question
Compared to coffee, we would expect the cross elasticity of demand for:
answer
tea to be positive, but negative for cream.
question
Which of the following goods will least likely suffer a decline in demand during a recession?
answer
Toothpaste
question
The larger the positive cross elasticity coefficient of demand between products X and Y, the:
answer
greater their sustainability
question
Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price:
answer
will increase but equilibrium quantity will be unchanged.
question
The formula for cross elasticity of demand is percentage change in:
answer
quantity demanded of X/percentage change in price of Y.
question
Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is:
answer
negative and therefore these goods are complements.
question
The main determinant of elasticity of supply is the:
answer
amount of time the producer has to adjust inputs in response to a price change.
question
The cross elasticity of demand for product X with respect to the price of product Y is -1.2. It can be inferred that X and Y are:
answer
complementary products
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
