A firm produces and sells two goods, A and B. Good A is known to have many close substitutes; good B makes up a significant portion of most families' budgets. From these facts, we would expect that the demand for Good A would be , while that of Good B would be__.

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10-10-2019
Business

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A firm produces and sells two goods, A and B. Good A is known to have many close substitutes; good B makes up a significant portion of most families' budgets. From these facts, we would expect that the demand for Good A would be , while that of Good B would be__.

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DelcieRiveria DelcieRiveria · Answer 1 · 2019-10-10T07:32:25+02:00

Answer:

The demand for good A will be elastic. Demand for good B will also be elastic.

Explanation:

A firm produces and sells two goods, A and B.

Good A is known to have many close substitutes; good B makes up a significant portion of most families' budgets.

Since good A has a lot of substitutes an increase in its price will lead to a reduction in its quantity demanded as people will prefer a cheaper substitute. This will make its demand elastic.

Good B makes a significant portion of the families' budgets. So a change in its price will significantly affect the budget of the families. This will make its demand relatively elastic.

A firm produces and sells two goods, A and B. Good A is known to have many close substitutes; good B makes up a significant portion of most families' budgets. From these facts, we would expect that the demand for Good A would be ______, while that of Good B would be________.

Respuesta :

Otras preguntas

A firm produces and sells two goods, A and B. Good A is known to have many close substitutes; good B makes up a significant portion of most families' budgets. From these facts, we would expect that the demand for Good A would be , while that of Good B would be__.