Suppose the price of cereal rose by 25 and the

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19. Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%. Then we know the: A) price elasticity of demand for milk is 2. B) cross-price elasticity of demand for milk is 2. C) cross-price elasticity between cereal and milk is –0.5. D) cross-price elasticity between cereal and milk is –2. 20. In a linear demand curve: 21. The “gains from trade” refers to 22. The long-run price elasticity of supply of crude oil is ______ the short-run price elasticity of supply of crude oil. 23. If demand is elastic, then: A) the quantity effect dominates the price effect, and a decrease in price causes total revenue to rise. B) the quantity effect dominates the price effect, and an increase in price causes total revenue to rise. C) the price effect dominates the quantity effect, and a fall in price will cause total revenue to rise. D) the price effect dominates the quantity effect, and an increase in price will cause total revenue to rise.
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ECON 2106 Shelby Frost Exam 1 1:00 pm TR Spring 2008 Version A Page 8 24. In much of the country, homeowners choose to heat their houses with either natural gas or home heating oil. Which of the following could cause the demand for natural gas to change? Use the following to answer question 25: Figure: Supply and Demand 25. (Figure: Supply and Demand) In the market shown in this figure, a binding price floor is represented by: 26. A good is inferior if:
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