A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that
a. root beer and orange soda are substitutes
b. root beer and orange soda are complements
c. the cross-price elasticity of demand is elastic
d. the cross-price elasticity of demand is equal to 2
e. the cross-price elasticity of demand is equal to -2
A
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Which of the following is true of marginal revenue for a monopolist that charges a single price?
a. P=MR because there are no close substitutes for the monopolist's product.
b. P>MR because the monopolist must decrease price on all units sold in order to sell an additional unit.
c. P
Which of the following is NOT true about the aggregate demand curve?
A. The aggregate demand curve shows total planned real expenditures at different price levels. B. The aggregate demand curve considers the entire circular flow of income. C. Changes in the economic conditions in other countries will lead to a shift of the aggregate demand curve. D. The production possibilities curve determines the slope of the aggregate demand curve.