Considering the Concept of Cross-Price Elasticity, If Two Goods Are

question 44

Multiple Choice

Considering the concept of cross-price elasticity, if two goods are substitutes:

• A) an increase in the price of one causes a decrease in the demand for the other.
• B) a decrease in the price of one causes an increase in the demand of the other.
• C) an increase in the price of one causes an increase in the demand for the other.
• D) a decrease in the price of one has no effect on the demand for the other.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation and output increases.

Capital Markets

Financial markets for buying and selling equity and debt instruments, facilitating the raising of capital.

Real Asset

Physical or tangible assets, such as real estate, commodities, or natural resources, which have intrinsic value.

College Education

A postsecondary education program offered by universities and colleges, leading to a degree in a field of study.