Give examples of two substitute goods and two complementary goods. In each case explain why the goods are substitutes or complements
Please provide the best answer for the statement.
The pair of substitute goods given should correspond to the explanation that they are substitutes because when the price of one changes, the demand for the other changes in the same direction. When the price of butter rises, one expects the demand for margarine to increase; when the price of butter falls, one expects the demand for margarine to fall as butter lovers switch back to butter consumption.
The pair of complementary goods should fit the explanation that they are complements because when the price of one changes, the demand for the other is inversely related. When the price of tennis equipment rises, the demand for tennis-club memberships should fall (if tennis playing is a normal good).
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The marginal cost of a good or service
A) can be calculated from the marginal benefit of that good or service. B) decreases as more of the good or service is produced. C) can be derived from the production possibilities frontier. D) graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping. E) None of the above answers is correct.
What are remittances and what role do they in developing countries? How could this potentially benefit an economy?
What will be an ideal response?
Collateral requirements lessen the consequences of ________ because the collateral reduces the lender's losses in the case of a loan default and it reduces ________ because the borrower has more to lose from a default
A) adverse selection; moral hazard B) moral hazard; adverse selection C) adverse selection; diversification D) diversification; moral hazard
Suppose a person has a discount rate of zero. This implies she
A) places no value on the future. B) places no value on the present. C) values the present and the future equally. D) would not lend money at any positive interest rate.