Assume apples and oranges are substitutes. Suppose apple growers launch a successful advertising campaign that convinces consumers apples are a better product. As a result the cross-price elasticity of apples and oranges will become
A. More negative.
B. Less positive (move closer to zero).
C. More positive.
D. Less negative (move closer to zero).
Answer: B
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We know that people tend to overuse common resources. This problem can be viewed as an example of
a. a game in which the players succeed in reaching the cooperative outcome. b. the prisoners' dilemma. c. a situation to which game theory does not apply because of a lack of strategic thinking. d. a situation to which game theory does not apply because of too many decision-makers.
To measure an economy's output adjusted for changes in the price level, one would use
A. Nominal GDP. B. GDP per capita. C. Real GDP. D. Value added.
A system of prices promotes mutually advantageous exchanges
What will be an ideal response?
Why do small differences in the rate of economic growth produce large differences in the size of the economy over time? Illustrate with an example.
What will be an ideal response?