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Explain Why the Cross Elasticity of Demand for Substitute Goods

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Essay

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.


Definitions:

Habituation

Tendency of the brain to stop attending to constant, unchanging information.

Learned Helplessness

A condition in which a person suffers from a sense of powerlessness, arising from traumatic events or persistent failure to succeed. It is thought to be one of the underlying causes of depression.

Contingency Blocking

A phenomenon in classical conditioning where a subject learns to associate a particular stimulus with an outcome, blocking the learning of an association with a new stimulus presented at the same time.

Response Generalization

The process by which a learned response is applied to similar stimuli beyond the original conditioned stimulus.

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