Suppose that if the price of plane tickets increased, more people would choose to travel by train. If this happened, you would know that:
A. plane tickets and train tickets are complements.
B. plane tickets are an inferior good.
C. the cross-price elasticity between plane tickets and train tickets is negative.
D. the cross-price elasticity between plane tickets and train tickets is positive.
Answer: D. the cross-price elasticity between plane tickets and train tickets is positive.
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Taxation of agricultural land at a lower rate than commercial property might be justified _____
a. on utilitarian grounds b. on the benefit principle c. on the ability-to-pay principle d. on efficiency grounds
Suppose the Consumer Price Index (CPI) increased by 5 percent over each of the last 5 years while the GDP price index increased by 12 percent annually. Which of the following reasons could explain this difference?
a. Police unions across the country agreed to substantial salary cuts. b. Import good prices increased relative to domestic good prices. c. The price of used automobiles increased substantially relative to the prices of other goods. d. The price of fighter planes dropped due to increased competition in the aerospace industry. e. The price of investment goods purchased by businesses increased substantially relative to the prices of all other goods.