Author Question: People in the U.S. will rarely pay a great deal per gallon to obtain water because A) there are ... (Read 51 times)

mspears3 · **on:** Jun 29, 2018

People in the U.S. will rarely pay a great deal per gallon to obtain water because

A) there are so many excellent substitutes for water.
B) there is no relationship between objective price and subjective value.
C) they are usually creatures of habit.
D) they think water, as a basic necessity, ought to be supplied at a very low price.
E) they place a very low marginal value on water.

Question 2

Which of the following statements correctly identifies the difference between the cross-price elasticity of demand and the income elasticity of demand?

A) The income elasticity of demand can take only positive values, whereas the cross-price elasticity of demand can take both positive and negative values.
B) The cross-price elasticity of demand can take only negative values, whereas the income-elasticity of demand can take both positive and negative values.
C) The income elasticity of demand for a good is independent of the price changes of related goods, whereas the cross-price elasticity of demand for a good is independent of the income changes of the consumer.
D) The income elasticity of demand for a good is zero for normal goods, whereas the cross-price elasticity of demand for a good is always positive for normal goods.