If the cross elasticity of demand for potato chips and pretzels equals 1.5,
A. potato chips and pretzels must both be luxury goods.
B. either potato chips or pretzels must be a luxury good, and both may be luxury goods.
C. potato chips and pretzels must be substitutes.
D. potato chips and pretzels must be complements.
Answer: C
You might also like to view...
The slope of an indifference curve is equal to the ratio of the ____ of the good on the horizontal axis to the ____ of the good on the vertical axis
a. marginal utility (MU); marginal utility (MU) b. total utility (TU); total utility (TU) c. marginal product (MP); marginal product (MP) d. price (P); total utility (TU)
If there is a surplus in the market for loanable funds, the resulting change in the real interest rate
a. reduces both the quantity of loanable funds supplied and the quantity of loanable funds demanded. b. reduces the quantity of loanable funds supplied and raises the quantity of loanable funds demanded c. raises both the quantity of loanable funds supplied and the quantity of loanable funds demanded. d. raises the quantity of loanable funds supplied and reduces the quantity of loanable funds demanded.
When there is excess supply of a product in a market, which of the following is true?
a. Price must be above the equilibrium price. b. Price will tend to rise. c. Producers will expand output and sales will rise. d. Price must be below the equilibrium price.
Firm ABC designs and implements a lower-cost method of producing its product. This is an example of:
A. product innovation. B. the inverted U-theory. C. economies of scale. D. process innovation.