Coke and Pepsi probably have a:
A. more elastic cross-price elasticity of demand than do Coke and bananas.
B. less elastic cross-price elasticity of demand than do Coke and bananas.
C. cross-price elasticity of demand that is smaller than do Coke and bananas.
D. negative cross-price elasticity of demand.
Answer: A
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Assume a firm is currently employing 20 units of capital and 100 units of labor in its production process
Assume also that the marginal product of the 20th unit of capital is 40 units of output, the marginal product of the 100th unit of labor is 10 units of output and the per unit prices of capital and labor are $20 and $10, respectively. In this case, in order to minimize its costs of production the firm should: A) hire more capital and less labor. B) hire more labor and less capital. C) hire less capital and less labor. D) hire more capital and more labor.
There are two closely related crops, X and Y, with the following demand functions QX = 180 - 2PX + PY and QY = 150 + PX - PY where QX is the quantity of X, PX is the price of X, QY is the quantity of Y, and PY is the price of Y. These two crops are grown in two widely separated countries so there is no interrelationship between the supply curves. The short-run perfectly inelastic supply for X is
150 while the short-run perfectly inelastic supply for Y is 100. In equilibrium, the prices are A) PX = 80, PY = 130. B) PX = 40, PY = 65. C) PX = 60, PY = 120. D) PX = 30, PY = 80.