Weather experts are predicting that winter 2000 will be colder than the last three winters. Moreover, OPEC recently agreed to cut back on the production of oil. Answer the next five questions on the basis of the following diagram. Rational people make decisions based on average cost. People respond to incentives.
Peoples face tradeoffs.
The cost of something is what you give up to get it. Select the most appropriate statement. For food, the price elasticity of demand is high. For food, the income elasticity of demand is high. Both of the preceding statements are accurate.