If a customs union leads to a large amount of trade diversion relative to trade creation, it may be beneficial to world welfare

What does the cross-price elasticity of demand measure? How is it calculated?

What will be an ideal response?

Answer the following questions true (T) or false (F)

1. In order to construct the budget line, one only needs to know the prices of the goods in question. 2. Normal goods are goods for which consumption falls (rises) when income increases (decreases). 3. The consumer is at equilibrium when the marginal rate of substitution is equal to the slope of the budget line.