If a lower price for a Pepsi decreases the demand for a Coke, the cross elasticity value for Pepsi and Coke is
A) definitely negative.
B) definitely equal to zero.
C) definitely positive.
D) definitely greater than one.
E) possibly negative, positive, or zero, but there is not enough information to decide.
C
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If a tax is imposed on a good,________
A) consumer surplus increases B) producer surplus increases C) the quantity of the good traded in the market increases D) the equilibrium quantity of the good in the market falls
When the central bank pursues contractionary monetary policy, we that this policy will result in an increase in the interest rate, a reduction in investment, a reduction in demand, and a lower level of equilibrium output. Explain what happens to the position of the IS curve as the central bank pursues contractionary monetary policy
What will be an ideal response?