Suppose that when the price of root beer rises 1%, the quantity of hotdogs demanded falls 0.5%. This would mean that hotdogs and root beer are
A) substitutes, with a cross price elasticity of 0.5.
B) complements, with a cross price elasticity of -0.5.
C) substitutes, with a cross price elasticity of -2.0.
D) complements, with a cross price elasticity of -2.0.
Answer: B
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Which of the following is a rationale for development planning?
(a) government failure. (b) market failure. (c) failure of consumers to understand their preferences. (d) all of the above are rationales for development planning. (e) none of the above are rationales for development planning.
Which of the following would cause a firm's LRAC curve to shift up?
A) An increase in the amount of "learning by doing." B) An increase in the price of labor, all else constant. C) An increase in the amount of output produced by the firm. D) A decrease in the amount of capital employed by the firm.