If the Cross-Price Elasticity of Demand Between Two Goods Is

question 37

Multiple Choice

If the cross-price elasticity of demand between two goods is 0,

• A)a price change for one good will be exactly offset by a price change for the other
• B)neither demand curve would shift following a change in the price of one of the goods
• C)there is no income effect between the two goods
• D)the demand for each good is price inelastic
• E)the demand for each good is price elastic

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Definitions:

Profit-maximizing

A strategy or behavior where a firm aims to achieve the highest possible profit from its operations, considering costs, revenue, and market conditions.

Zero Economic Profit

A scenario where a firm's total revenues are exactly equal to its total costs, indicating no abnormal profit beyond the normal rate of return.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a firm to adjust to changes in market demand.

Average Variable Cost

The total variable costs divided by the quantity of output produced, showing the variable cost per unit of output.