Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter20: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 4CQ
Related questions
Question
Consumers can choose between gas powered cars and electic cars. Suppose the price of gas increases by 25%. We can expect the price of electic cars to :
Decrease
Remain Unchanged
Increase
It is impossible to say
Expert Solution
Step 1
Two goods are called ‘substitutes’ to each other, if they can satisfy same need of the consumers fully or partially. These goods are similar to each other. If a consumer consumes more of one good, he or she will have less desire for the other good.
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