The Cross-Price Elasticity Between Two Products Is Estimated to Be

question 1

Multiple Choice

The cross-price elasticity between two products is estimated to be 2. If the price of the first product is increased by 8%, demand for the second product will _____.

• A) increase by 8%
• B) decrease by 4%
• C) increase by 4%
• D) increase by 16%
• E) decrease by 8%

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Definitions:

Conditioned Stimulus

An initially impartial stimulus which, upon association with an unconditioned stimulus, gradually brings about a conditioned response.

Unconditioned Stimulus

A stimulus that naturally triggers a reflexive response without the need for prior learning.

Stimulus Generalization

A learning process in which the conditioned response is evoked by stimuli that are similar to the conditioned stimulus.

Conditioned Response

A learned response to a previously neutral stimulus that becomes associated with a conditioned stimulus.