An economist estimates that for every 1 percent increase in the price of natural Christmas trees, the demand for artificial trees rises by .2 percent. From this information one can conclude that:
A. the income elasticity of demand for natural Christmas trees is less than 1.
B. natural and artificial Christmas trees are complements.
C. natural and artificial Christmas trees are substitutes.
D. natural Christmas trees are luxuries.
Answer: C
You might also like to view...
Research supporting the new Keynesian model finds that prices are ________
A) slow to adjust to aggregate demand shocks B) changed very frequently C) changed only infrequently D) not as flexible as wages
A standardized product is a product
A. where the demand function is downward sloping for both the firm and the industry. B. that is unique to one producer. C. which is produced according to government regulations. D. that has many perfect substitutes.
Which of the following does not influence the position of the long-run aggregate supply curve?
What will be an ideal response?
If the aggregate supply curve is vertical, then the short-run Phillips curve will
A. be horizontal. B. also be vertical. C. slope upward. D. slope downward.