It Is Estimated That a 3 Percent Drop in the Price

question 61

Multiple Choice

It is estimated that a 3 percent drop in the price of Asian and European cars will decrease the demand for American cars by 0.84 percent. From this information one can conclude that:

• A) the income elasticity of demand for American cars is less than 1.
• B) European and Asian cars are luxuries.
• C) European and Asian cars are substitutes for American cars.
• D) European and Asian cars are complements for American cars.

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Definitions:

State Militias

Military forces maintained by individual states for defense and emergency purposes, distinguishable from the federal armed forces.

Annapolis Convention

A meeting held in 1786 to discuss the commercial problems besetting the United States under the Articles of Confederation, paving the way for the Constitutional Convention of 1787.

Articles of Confederation

The first written constitution of the United States, ratified in 1781, which established a weak central government before being replaced by the U.S. Constitution.

Star Spangled Banner

The national anthem of the United States, written by Francis Scott Key.