Question 1. [5 points] If the cross-price elasticity of demand between chocolates andicecreams is 0.5, then are chocolates and icecreams substitutes or complements? Explain.

Question 2. [5 points] Examine whether the following statement is true or false. Explain.

The income elasticity of demand is positive for a normal good.

Question 3. Examine whether each of the following statements is true or false. Explain.

a. [5 points] Average variable cost rises as output rises if marginal cost exceeds average total cost.

b. [5 points] Average total cost falls as output rises if marginal cost is less than average variable cost.