Economists Have Estimated That the Cross-Price Elasticity of Demand Between

question 280

Multiple Choice

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ________, and spirits and wine are ________.

• A)complements; luxuries
• B)normal goods; luxuries
• C)complements; substitutes
• D)substitutes; luxuries

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Definitions:

Conditioned Response

A learned response to a previously neutral stimulus that, after association with an unconditioned stimulus, elicits a reaction.

Unconditioned Response

An automatic, natural reaction to a stimulus that occurs without prior conditioning or learning.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior learning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually comes to trigger a conditioned response.