If a Price Hike of 5 Per Cent Increases the Quantity

question 91

Multiple Choice

If a price hike of 5 per cent increases the quantity demanded of another good by 2 per cent, the goods must be _______ and the cross elasticity of demand equals _______.

• A) substitutes; 2.5
• B) complements; 2.5
• C) substitutes; 0.40
• D) complements; 0.40

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Definitions:

Resources

The total means available for economic and political development, such as mineral wealth, labor force, and armaments.

Government Purchases

Expenditures by government bodies on goods and services that directly absorb resources or satisfy human wants.

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State Governments

The governing bodies of individual U.S. states, responsible for making and enforcing laws within their own jurisdictions.