The demand for a product is likely to be more elastic:
A. the smaller the share of the total budget spent on the product.
B. when more complementary products are available.
C. in the short run than in the long run.
D. when more good substitutes for the product are available.
Answer: D
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Explain why in cities such as New York City that have rent ceiling laws, so many people who work in the city commute from outside the city
What will be an ideal response?
The more substitutes available for a product, the
A) larger is its price elasticity of demand. B) smaller is its income elasticity of demand. C) smaller is its price elasticity of demand. D) larger is its income elasticity of demand.
Prospect theory can explain why
A) people tend to gamble on long odds with small expected utility. B) people tend to sell their losing stocks and keep their winning stocks. C) people should only sell their losing stocks. D) people should never play the lottery.
One reason the housing bubble occurred is because the:
A. securitization of mortgages meant more mortgages were low-risk, attracting investors. B. herd instinct caused everyone to stop buying homes. C. recency effect affected people's perceptions of home values. D. All of these statements are true.