What does the sign (positive/negative) of the cross elasticity of demand tell us about the relationship between two goods?
What will be an ideal response?
The sign of the cross elasticity of demand reveals whether two goods are substitutes or compliments: The cross elasticity of demand is positive for substitutes and negative for complements.
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What would best explain why a generally risk-averse person would bet $100 during a night of blackjack in Las Vegas?
A) Risk aversion relates to income choices only, not expenditure choices. B) Risk averse people may gamble under some circumstances. C) The economics of gambling and the economics of income risk are two different things. D) Risk-averse people attach high subjective probabilities to favorable outcomes, even when objective probabilities are known.
The average number of times per year that a dollar bill is used to pay for final goods and services is the:
A. Monetary rule B. Velocity of money C. Asset demand for money D. Transactions demand for money