Two Goods Are Considered Substitutes If

question 129

Multiple Choice

Two goods are considered substitutes if

• A) a decrease in the demand for one leads to a decrease in the supply of the other.
• B) an increase in the demand for one leads to a decrease in the supply of the other.
• C) an increase in the price of one leads to an increase in the demand for the other.
• D) a decrease in the price of one leads to an increase in the demand for the other.
• E) a decrease in the supply of one leads producers to switch to production of the other.

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Definitions:

Laboratory Setting

A controlled environment designed for scientific experiments, research, and testing, where conditions can be manipulated to observe effects on variables.

Experimentation Problems

Issues arising during the process of conducting experiments that can affect outcomes, such as biases, uncontrollable variables, or ethical considerations.

Causality

Refers to the analysis of causes and their effects. Specifically, causality means that a change in the independent variable (x) produces a change in the dependent variable (y). In analyzing survey data, we establish causality by demonstrating that an association exists between x and y; x precedes y; and the introduction of a causally prior control variable does not result in the original association disappearing.

Empirically Established

Information or theories that are confirmed or supported by observation, experiment, or other forms of scientific research.