Answer the following statement true (T) or false (F)
1) If the coefficient of cross elasticity of demand is positive, the two products are complementary
goods.
2) An income elasticity coefficient of -1.8 means the product is a normal good.
3) A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.
4) We would expect the coefficient of cross elasticity of demand for DVD players and DVDs to be
positive.
1) F
2) F
3) T
4) F
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Profit functions are homogeneous of degree zero.
Answer the following statement true (T) or false (F)
Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Maria’s opportunity cost of doing one load of laundry is:
A. 4 pages. B. 6 pages. C. 2/3 of a page. D. 3/2 of a page. E. impossible to compute without additional information.