If the cross price elasticity of demand between two commodities is positive, then these commodities are
A) are superior.
B) are complements.
C) are substitutes.
D) are inferior.
C
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Suppose the socially-optimal quantity of good x is 2,500 units and the market-equilibrium quantity of good x is 3,000 units. When 2,500 units of good x are produced, the
a. external cost of good x exceeds the private value of good x. b. external cost of good x equals the private value of good x. c. social cost of good x exceeds the private value of good x. d. social cost of good x equals the private value of good x.
Which government policy raises the interest rate and raises investment spending?
Which of the following events would definitely cause a decrease in the equilibrium price of cotton shirts?
a. An increase in the price of wool shirts and a decrease in the price of raw cotton. b. A decrease in the price of wool shirts and a decrease in the price of raw cotton. c. An increase in the price of wool shirts and an increase in the price of raw cotton. d. A decrease in the price of wool shirts and an increase in the price of raw cotton.
The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because
A. all gains from mutually beneficial trade are captured. B. the government regulates the market. C. the Supreme Court determines market activities. D. of the rise of the legislative apparatus that supports trade.