The Figure Given Below Shows the Demand Curves for Five

question 17

Multiple Choice

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-Assume that due to unfavorable conditions in a prime honey-producing area, the price of honey increases by 50 percent. The quantity consumed of herbal tea declines immediately by 25 percent. Everything else held constant, the:

• A)cross-price elasticity of demand for herbal tea and honey is negative, and therefore the two goods are substitutes.
• B)cross-price elasticity of demand for herbal tea and honey is negative, and therefore the two goods are complements.
• C)cross-price elasticity of demand for herbal tea and honey is positive, and therefore the two goods are substitutes.
• D)cross-price elasticity of demand for herbal tea and honey is positive, and therefore the two goods are complements.
• E)cross-price elasticity of demand cannot be determined from the information provided.

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Definitions:

Respondent Behavior

Behavior that occurs as an automatic response to some stimulus.

Observational Learning

Learning by observing others.

Observational Learning

The process of acquiring new behaviors or knowledge by watching and imitating others, also known as modeling.

Operant Conditioning

A learning process in which behavior is strengthened or weakened by the consequences, such as rewards or punishments.