If Two Goods Are Substitute Goods

question 133

Multiple Choice

If two goods are substitute goods,

• A)an increase in the price of one will cause a decrease in the demand for the other.
• B)an increase in the price of one will cause an increase in the demand for the other.
• C)the price elasticity of demand for both goods will be greater than 1.
• D)the price elasticity of demand for both goods will be less than 1.

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Definitions:

Excise Tax

A tax levied on specific goods, services, or transactions, often with the aim of reducing their consumption or raising revenue.

Imported Items

Goods brought into a country from abroad for sale.

Tariff

A tax imposed by a government on goods and services imported from other countries to protect domestic industries or to generate revenue.

Import Quotas

Limits set by a government on the amount or value of certain goods that can be imported into a country, usually to protect domestic industries.