Related to the Economics in Practice on p. 51: The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard-copy textbooks are substitute products. If the price of the Kindle decreases
A. demand for the Kindle increases and the quantity of electronic textbooks demanded increases.
B. the quantity of Kindles demanded increases and the quantity of electronic textbooks demanded increases.
C. demand for the Kindle increases and demand for traditional, hard-copy textbooks decreases.
D. the quantity of Kindles demanded increases and demand for electronic textbooks increases.
Answer: D
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The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. The marginal private cost when output equals 2 tons of paper per week equals
A) $50 per ton B) $100 per ton. C) $150 per ton. D) None of the above answers is correct.
If you thought the share price of a stock was going to rise, would you be more likely to buy a call option or a put option?
A. a call option B. a put option C. a call option and a put option D. There is not enough information given to answer this question.
A price taker is a buyer or seller who:
A. can affect the market price, but only when collaborating with other buyers or sellers. B. takes the market price and chooses to increase or decrease it. C. takes prices in the area and averages them together to set the price for his/her good. D. cannot affect the market price.
In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of water doubled. The community then drilled the well deeper and started pumping again. In this community,
A. water production is characterized by increasing opportunity costs. B. markets cannot reach equilibrium because there is a persistent shortage of water. C. the supply of water is perfectly inelastic because it is a finite resource. D. higher water prices can reduce quantity demanded but cannot increase quantity supplied.