If Microsoft Wanted to Prove to the Justice Department That

question 265

Multiple Choice

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

• A) that the demand for Windows' is inelastic.
• B) that the demand for Windows is elastic.
• C) a large positive value for the cross elasticity of Windows and other software.
• D) a negative income elasticity for Windows.
• E) a positive income elasticity for Windows.

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Definitions:

Good Y

A general term used to represent a specific product or commodity in economic models or discussions.

Demand Function

A mathematical representation that describes the relationship between the quantity of a good that consumers are willing and able to purchase at various prices, holding other factors constant.

Income Elasticity

A measure of how much the demand for a product changes in response to a change in consumers' income.

Income Elasticity

A measure of how the quantity demanded of a good or service changes in response to a change in consumer income.