When the Price of a Bicycle Falls from $220 to $180

question 149

Multiple Choice

When the price of a bicycle falls from $220 to $180 and other things remain the same, I. the quantity demanded of bicycles increases from 150 to 250 an hour.
II. the quantity demanded of skateboards decreases from 125 to 75 an hour.
III. the quantity demanded of bicycle helmets increases from 170 to 230 an hour.
Skateboards and bicycles are ________ because a fall in the price of a bicycle brings ________ in the quantity demanded of skateboards. The cross elasticity of demand for skateboards with respect to bicycles is ________.

• A)complements; an increase; -0.4
• B)complements; a decrease; 0.4
• C)substitutes; an increase; -2.5
• D)substitutes; a decrease; 2.5
• E)substitutes; a decrease; 0.4

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Definitions:

Respiratory Membrane

The respiratory membrane is the thin barrier in the lungs where gas exchange occurs, allowing oxygen to enter the blood and carbon dioxide to be expelled.

Diffusion Coefficient

Measure of how easily a gas diffuses through a liquid or tissue.

Surface Tension

The elastic tendency of a fluid surface which makes it acquire the least surface area possible.

Lung Recoil

Decrease in the size of an expanded lung as a result of a decrease in the size (volume) of its alveoli; due to elastic recoil of elastic fibers surrounding alveoli and water surface tension of a thin film of water within alveoli.