True/ False & Why

a. The price of good A has decreased. To see how the substitution effect changes A consumption, it is necessary to know the income elasticity of A.

b. In a short-run situation, a firm should cease operation once its Variable Cost is greater than its Fixed Cost.

c. A single price monopoly has marginal cost of 10 and faces a market demand with price elasticity= -3. To maximize profit, the monopoly sets its price at 10 because P=MR=MC.

d. The own price elasticity of a good is 0. This means it is an inferior good.