If two goods are substitutes, then
A) an increase in the price of one causes the demand for the other to fall.
B) there is an inverse relationship between changes in the price of one good and changes in the demand for the other.
C) if the price of one good falls, the demand for the other good falls also.
D) changes in the quantity demanded of one good will not affect the demand for the other.
Answer: C
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a. True b. False
A special interest issue is one that:
a. provides large private benefits and large social benefits b. provides small private benefits and large social benefits. c. provides large benefits to each of a small number of people and small costs to each of a large number of people. d. provides small benefits to each of a small number of people and large costs to each of a large number of people.
A consumer possesses five pounds of bananas and values their total utility at $2.14 . If one additional pound is acquired and marginal utility is 11 cents, total utility will
a. rise to $2.25. b. fall to $2.03. c. stay the same. d. fall to $2.11.
What are the determinants of price elasticity of demand?
What will be an ideal response?