An increase in the price of good X causes the demand for good Y to shift inward. One can conclude that X and Y are:
a. complements.
b. substitutes.
c. unrelated goods.
d. normal goods.
e. exceptions to the law of demand.
a
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Which of the following is often referred to as the basic postulate of economics?
A) Incentives matter—individuals respond in predictable ways to changes in personal costs and benefits. B) Individuals act only out of selfish motives. C) The accuracy of the assumptions is the best test of an economic theory. D) The value of a good is objective; it is equal to the cost of producing the good.
Which of the following could be a cause of consumption decreasing?
A. Wealth increases. B. Real income increases. C. Expected future income increases. D. Interest rates increase.
Referring to Figure 18.2, if the exchange rate is currently 14 pesos per dollar, then we expect the dollar to ________ and the peso to ________.
A. depreciate; depreciate B. depreciate; appreciate C. appreciate; depreciate D. appreciate; appreciate
A bill pending before the Legislature in the tiny island nation of WooHoo would prohibit private companies from selling canoe insurance and make the state the single payer of claims for canoe accidents. Private insurance companies that have made above normal profits have spent large sums of money trying to prevent the legislature from passing this bill into law. This is an example of
A. an externality. B. government failure. C. collusion. D. rent-seeking behavior.