Practice Questions
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If the price of coffee rises, and as a result, the quantity demanded for tea increases, what does this indicate about the relationship between coffee and tea?
When coffee gets more expensive, people look for other options. Other options are incorrect because Some might think that if people buy more tea, it m...
If the price of coffee increases, what is likely to happen to the demand for tea, assuming they are substitutes?
When coffee gets more expensive, people might buy more tea instead. Other options are incorrect because Some might think that if coffee costs more, pe...
If the price of coffee increases, and the quantity demanded for tea also increases, what does this indicate about the cross-price elasticity of demand between these two goods?
When the price of coffee goes up, people buy more tea instead. Other options are incorrect because Some might think that if one price goes up, the oth...
If the cross-price elasticity of demand between two goods is positive, what does this indicate about the relationship between the two goods in terms of price sensitivity and market equilibrium?
When the cross-price elasticity is positive, it means the two goods are substitutes. Other options are incorrect because This option suggests that the...
How does the cross-price elasticity of demand reflect the relationship between two goods when the price of one good increases?
When the price of one good goes up, people often buy more of a similar good instead. Other options are incorrect because This answer confuses substitu...
If the price of coffee increases, and the quantity demanded of tea also increases, what can we infer about the relationship between coffee and tea?
When coffee gets more expensive, people might buy more tea instead. Other options are incorrect because Some might think that if one goes up, the othe...
If the price of coffee increases and the quantity demanded for tea increases as a result, this indicates that coffee and tea are:
When coffee gets more expensive, people look for other options. Other options are incorrect because Some might think that if one item costs more, peop...
If the price of coffee increases, what is likely to happen to the demand for sugar, assuming coffee and sugar are complementary goods?
When coffee costs more, people buy less coffee. Other options are incorrect because Some might think that if coffee is more expensive, people will buy...
Which of the following statements correctly describe the implications of cross-price elasticity of demand? Select all that apply.
Cross-price elasticity shows how the demand for one good changes when the price of another good changes. Other options are incorrect because This opti...
A recent increase in the price of coffee has led to a rise in the quantity demanded for tea. How would you classify the relationship between coffee and tea based on this scenario?
When coffee prices go up, people look for other drinks. Other options are incorrect because Some might think that if one goes up, the other must go up...
If the cross-price elasticity of demand between two goods is negative, this indicates that they are __________.
When two goods are complements, they are used together. Other options are incorrect because Some might think substitutes are related because they can ...
If the price of coffee increases, what is likely to happen to the demand for sugar, assuming they are complementary goods?
When coffee costs more, people buy less coffee. Other options are incorrect because Some might think that if coffee is more expensive, people will buy...
A coffee shop notices that when the price of pastries increases, the demand for their coffee decreases. Which of the following best explains this relationship in terms of cross-price elasticity of demand?
Pastries and coffee are complementary goods. Other options are incorrect because This answer suggests that coffee is a replacement for pastries; This ...
If the price of coffee increases significantly, and we observe a decrease in the quantity demanded for tea, what does this indicate about the relationship between coffee and tea?
When coffee's price goes up, people might buy less coffee. Other options are incorrect because This answer suggests that coffee and tea are used toget...
Arrange the following steps in the correct order to understand how an increase in the price of one good affects the demand for a related good through cross-price elasticity of demand: 1) Identify if the goods are substitutes or complements. 2) Observe the change in the price of the first good. 3) Analyze the resulting change in demand for the second good. 4) Determine the cross-price elasticity value.
First, you need to know if the goods are substitutes or complements. Other options are incorrect because This option starts with observing the price c...
Complementary goods relate to each other as substitutes relate to: A: demand changes :: B: price changes :: C: quantity supplied changes :: D: market equilibrium changes
Substitutes are goods that can replace each other. Other options are incorrect because Some might think demand changes are the same as price changes; ...
If the price of coffee rises and the demand for tea increases, what does this indicate about the relationship between these two goods?
When coffee gets more expensive, people look for alternatives. Other options are incorrect because Some might think that if one price goes up, the oth...
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