Pam sees that the price of bananas has risen in the grocery store. All else equal, she decides to buy more tangerines than she normally purchases. From the information given, you might conclude that:
A. tangerines and bananas are substitutes.
B. bananas are a luxury good.
C. tangerines are an inferior good.
D. tangerines and bananas are complements.
Ans: A. tangerines and bananas are substitutes.
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The above figure shows a perfectly competitive firm. If the market price is $5, the firm
A) is making an economic profit. B) is making zero economic profit. C) will immediately shut down. D) will not shut down. E) might shut down but more information is needed about the AVC.
How does time preference affect one's willingness to invest in human capital?
A) A higher rate of time preference tends to increase human capital investment. B) A higher rate of time preference tends to decrease human capital investment. C) A lower rate of time preference tends to decrease human capital investment. D) Economists have found no relationship between time preference and human capital investment.