If the price of a normal good rises, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.
A. more; more
B. more; less
C. less; more
D. less; less
Answer: D
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A production possibilities curve shows the relationship between:
A) the price of a good and its quantity supplied. B) the maximum production of one good for a given level of production of another good. C) the different combinations of two inputs used to produce a given quantity of output. D) the quantity of output produced and the amount of inputs required for the production of the output.
Refer to the graph shown. Which point has an elasticity less than 1?
A. A B. B C. C D. D
What is a basic principle of the law of demand?
a. The higher the price, the more people will want the good. b. Everyone has a limited income that they will spend. c. When a good's price is lower, people will buy more of it. d. Services are of interest in the same way that goods are.
Someone who derives benefits from something not paid for is a ______.
a. negative spillover b. rival consumer c. free rider d. moral hazard