Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?
A. The price of orange juice will increase, and the quantity purchased will fall.
B. The price of orange juice will fall, and the quantity purchased will increase.
C. The price of orange juice will increase, and the quantity purchased will increase.
D. The price of orange juice will fall, and the quantity purchased will fall.
Answer: D
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Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is $2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross-price elasticity of demand for beans and rice is
a. 0.71, and they are substitutes. b. -0.71, and they are complements. c. 1.4, and they are substitutes. d. -1.4, and they are complements.
In a market, there are many firms selling differentiated products. This market is:
A. a monopoly. B. an oligopolistic market. C. a competitive market. D. a monopolistically competitive market.