Question

For which pairs of goods is the cross-price elasticity most likely to be negative?

	a.	Ipads and laptops
	b.	pens and pencils
	c.	hamburgers and french fries
	d.	coffee and baseballs

Suppose gasoline prices rise and remain high in the future. As a result, drivers typically will

	a.	reduce their quantity demanded of gasoline more in the long run than in the short run.
	b.	not reduce their quantity demanded in the short run nor the long run.
	c.	increase their quantity demanded in the short run but reduce their quantity demanded in the long run.
	d.	reduce their quantity demanded of gasoline more in the short run than in the long run.

In response to a shortage caused by the imposition of a binding price ceiling on a market,

	a.	price will no longer be the mechanism that rations scarce resources.
	b.	long lines of buyers may develop.
	c.	sellers might choose to ration the good or service according to their own personal biases.
	d.	All of the above are correct.

A necessity such as toothpaste tends to have a

	a.	low price elasticity of demand and low income elasticity of demand.
	b.	high price elasticity of demand and low income elasticity of demand.
	c.	low price elasticity of demand and high income elasticity of demand.
	d.	high price elasticity of demand and high income elasticity of demand.

A producer will be willing to produce & sell a good if the producer receives a price that is enough to cover their

	a.	total profit.
	b.	producer surplus.
	c.	cost of producing.
	d.	buyers' willingness to pay for the good.

Price controls and taxes will cause deadweight losses because they

	a.	lead to losses in total surplus for consumers and producers.
	b.	alter the incentives for both buyers and sellers to exchange the good.
	c.	prevent buyers and sellers from making some of the mutually advantageous trades that would occur without these policies imposed in the market.
	d.	All of the above are correct.

In the long run, rent control will cause housing shortages to

	a.	increase, because the demand and supply of housing becomes more elastic overtime.
	b.	increase, because the demand and supply of housing becomes less elastic overtime.
	c.	decrease, because the demand and supply of housing becomes more elastic overtime.
	d.	decrease, because the demand and supply of housing becomes less elastic overtime.

Answer 1

Answer 1 : correct answer is C

Hamburger and French fries have the negative cross elasticity of demand. Negative cross elasticity of demand means that these goods are the complementary goods in consumption.

Suppose the price of french fries increase then people will demand less hamburgers be both arr complementary goods . These goods can be taken together. Other options can't be true because all are substitute goods and these goods have positive cross elasticity of demand.