SOLUTIONS TO ECON QUIZ

# A remember if 2 goods are complements an increase in

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Unformatted text preview: n P and if supply , then P . Thus, the result for the equilibrium price is ambiguous. But for both cases the equilibrium qty.  since both curves shift to the right. 11. A, remember if 2 goods are complements, an increase in price of 1 good cause a decrease in QD of the other. 12. C, e ­cars and gas ­cars are substitutes, which means that the increase in price of gas will increase QD of e ­cars. But how can you determine the price of e ­ cars? There’s not enough info. 13. A, definition. 14. A, the own ­p elasticity is 0.7 which is less than 1, therefore demand is inelastic. 15. B, if demand is elastic a decrease in price will lead to more revenue, because demand would be very responsive to the decrease in price and QD would increase by a lot. 16. A, income elasticity for an inferior good is negative because when income , QD of the inferior good, like bu...
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