Put the following products in order from lowest to highest based on their cross-price elasticity of demand with peanut butter: bread, bologna, floppy disks. Justify your answer.
What will be an ideal response?
Bread has a negative cross-price elasticity because bread and peanut butter are complements. Floppy disks have a zero cross-price elasticity because they are unrelated to peanut butter. Bologna will have a positive cross-price elasticity because it is a substitute for peanut butter.
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Applying neoclassical theory to the housing market, a higher marginal product of (housing) capital may be caused by ________
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Explain the ways in which the government can persuade private businesses to invest more in order to speed up the process of capital formation?
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What will be an ideal response?