Cross elasticity of demand for
A. substitutes will normally be positive.
B. complements will normally be positive.
C. substitutes will normally be negative.
D. complements will normally be infinite.
Answer: A
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Which of the following is an example of a normative question?
A) What fraction of an income tax cut will be spent on imported goods? B) How will an increase in the inheritance tax affect tax revenues? C) How will an increase in unemployment benefits affect the unemployment rate? D) Should Florida implement a state income tax to reduce its deficit?
Refer to the scenario above. Which of the following will happen in equilibrium if the game is played only once?
A) Social surplus will be maximized. B) Tom will trust Harry and Harry will defect. C) Tom will trust Harry and Harry will cooperate. D) Neither of them will make any money.