Two goods, X and Y, are complementary goods if the demand for X:
a. increases when the price of Y increases.
b. increases when income increases.
c. decreases when the price of Y increases.
d. increases as the price of its substitute good increases.
e. decreases as the price of its substitute good decreases.
c
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Using the figure above, suppose Starbucks charges $4.50 per cup for its latte. Which of the following is true?
i. At this price, the demand for Starbucks latte is elastic. ii. If Starbucks lowers the price of its latte, its revenue will decrease. iii. If Starbucks raises the price of its latte, the demand for it will become less elastic. A) Only iii B) Only i C) Only ii D) i and ii E) i and iii
Governments may successfully intervene in competitive markets in order to achieve economic efficiency
A) at no time; competitive markets are always efficient without government intervention. B) to increase the incidence of positive externalities. C) in cases of positive externalities only. D) in cases of negative externalities only. E) in cases of both positive and negative externalities.