"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion
What will be an ideal response?
Their separate elasticities do not indicate whether apples and oranges are substitutes for each other. If apples and oranges are not substitutes but each had many other substitutes, then their separate price elasticities will be high. To conclude that apples and oranges are substitutes for each other, the cross elasticity of demand between them must be positive.
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Government tax and expenditure policies that affect real GDP are called
A) automatic fiscal policy. B) discretionary fiscal policy. C) fiscal policy. D) supply-side policy.
If the real risk-free interest rate falls, the:
a. Demand curve for real loanable funds rises. b. Demand curve for real loanable funds falls. c. Supply curve of real loanable funds rises. d. None of the above.