Which of the following statements is true ?
A) If the income elasticity of demand is less than zero, the good is an inferior good.
B) Only if the demand curve is vertical will sellers raise the price by the full amount of a tax.
C) Two goods are substitutes if the cross-elasticity of demand coefficient is positive.
D) A price elasticity of supply coefficient equal to 1.5 means the product exhibits an elastic supply and a 10 percent increase in the price will increase the quantity supplied by 15 percent.
E) All of the above.

Question

Quizplus · Accepted Answer

All the statements are true: A) Negative income elasticity indicates an inferior good. B) A vertical demand curve means perfectly inelastic demand, so sellers can pass the full tax to consumers. C) Positive cross-elasticity indicates substitute goods. D) A price elasticity of supply greater than 1 indicates elastic supply, so a 10% price increase leads to a 15% increase in quantity supplied.

Which of the Following Statements Is True