Complements and Substitutes in Economics Quiz

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What does the cross-price elasticity measure?

Responsiveness of quantity demanded to a change in the price of a related good (correct)

Responsiveness of quantity demanded to a change in income

Responsiveness of quantity supplied to a change in the price of a related good

Responsiveness of quantity demanded to a change in price of the same good

Which type of goods are complements?

Goods that are unrelated

Goods with no impact on each other's demand

Goods that are produced together

Goods that have a close relationship in consumption (correct)

What does income elasticity measure?

Responsiveness of quantity demanded to a change in the price of a related good

Responsiveness of quantity supplied to a change in price

Responsiveness of quantity demanded to a change in income (correct)

Responsiveness of quantity supplied to a change in income

How do substitutes impact each other's demand?

They cause an increase in demand for each other Signup and view all the answers

What is the relationship between price elasticity of demand and total spending?

Increase in price elasticity leads to a decrease in total spending Signup and view all the answers

When the price of a good falls, what effect is greater?

Substitution effect Signup and view all the answers

What does the substitution effect suggest when the price of a good rises?

Buy less Signup and view all the answers

For an inferior good, what does the income effect indicate when the price rises?

Buy more Signup and view all the answers

When the price of a complementary good falls, what is likely to happen to the demand for the main good?

Increase Signup and view all the answers

How does the income elasticity of demand differ for normal goods and inferior goods?

It is positive for normal goods and negative for inferior goods Signup and view all the answers

In terms of price elasticity, which type of goods have more elastic demand?

Luxury goods Signup and view all the answers

What is the total value of the 20 T-shirts bought at a price of $7 each?

$220 Signup and view all the answers

If the price of T-shirts rises, what generally happens to consumer surplus?

It decreases Signup and view all the answers

What concept is used to measure how demand for one good responds to a change in the price of another?

Cross-price elasticity of demand Signup and view all the answers

If two goods are complements, what happens when the price of one good increases?

Demand for one good increases, and for the other it decreases Signup and view all the answers

What does price elasticity of demand measure?

How demand responds to price changes Signup and view all the answers

Which concept measures how responsive quantity demanded is to a change in consumer income?

Income elasticity of demand Signup and view all the answers

Complements and Substitutes in Economics Quiz

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