Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:**Question:**
d. Because Streaming and Cable TV are close _______ (Complements/Substitutes), the Demand for Streaming is _______ (Elastic/Inelastic).
**Explanation:**
This question examines the relationship between streaming services and cable TV and their impact on the demand for streaming. Here, you need to determine whether streaming and cable TV are complements or substitutes and accordingly, whether the demand for streaming is elastic or inelastic.
- **Complements**: If streaming and cable TV are complements, an increase in the usage or price of one leads to a decrease in the demand for the other.
- **Substitutes**: If streaming and cable TV are substitutes, an increase in the usage or price of one leads to an increase in the demand for the other.
- **Elastic Demand**: This means that the quantity demanded of streaming changes significantly with a change in price.
- **Inelastic Demand**: This indicates that the quantity demanded of streaming changes very little with a change in price.
The exercise tests your understanding of economic concepts of complements, substitutes, and elasticity.
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