The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent. The quantity of doughnuts demanded also fell by 20 percent. From this information, we can conclude that
A) the demand for coffee is elastic.
B) the demand for coffee is unit elastic.
C) coffee is an inferior good.
D) the cross elasticity demand between coffee and doughnuts is -0.5.
E) the income elasticity of demand for coffee is 2.
D
You might also like to view...
Some people argue that there are two advantages to holding mutual funds. The first is that mutual funds provide an inexpensive way to hold a diversified portfolio. The second is that because of their expertise mutual fund managers should be able to consistently beat the market. Which of the following does the evidence show?
a. Diversification does reduce risk and mutual funds typically outperform the market. b. Diversification does reduce risk, but mutual funds do not typically outperform the market. c. Diversification does not reduce risk but mutual funds typically outperform the market. d. Diversification does not reduce risk and mutual funds do not typically outperform the market.
Refer to the diagram. Discretionary fiscal policy designed to slow the economy is illustrated by:
A. the shift of curve T 1 to T 2 .
B. the shift of curve T 2 to T 1 .
C. a movement from a to c along curve T 2 .
D. a movement from d to b along curve T 1 .