Explain the difference between substitutes and complements
What will be an ideal response?
Substitutes are goods and services that can be used for the same purpose. Complements are goods and services that are used together.
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A market is allocatively efficient if
A) the sum of the consumer surplus and the producer surplus has been maximized. B) consumer surplus has been maximized. C) producer surplus has been maximized. D) profit has been maximized.
A judge requires Harry to make a payment to Sally. The judge says that Harry can pay her either $10,000 today or $12,000 two years from today. Of the following interest rates, which is the highest one at which Harry would be better off paying the money today?
a. 4 percent b. 6 percent c. 9 percent d. 11 percent
The solvency of Social Security can be extended if
A. the tax rate is reduced. B. the cap on taxable earnings is lowered. C. the retirement age is reduced. D. the program is means tested.
A price floor that is set above market equilibrium will cause
A) an excess quantity demanded. B) a shortage. C) a surplus. D) queuing on the part of consumers.