An increase in real dividend income minus taxes represents
A) a pure substitution effect.
B) a pure income effect.
C) a combination of income and substitution effects.
D) neither a pure income effect nor a pure substitution effect.
B
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The behavior of firms is best understood by focusing on
a. money profit b. economic profit c. accounting profit d. economic profit minus implicit costs e. money profit minus explicit costs
Scaling back the U.S. "war on terror" would:
A. suggest that the United States is allocating less than the optimal amount of resources to the war on terror. B. shift U.S. production from "defense goods" to "civilian goods." C. shift U.S. production from "civilian goods" to "defense goods." D. shift the production possibilities curve inward.
Countries that have a trade surplus have a:
A. negative net capital outflow. B. positive net capital outflow. C. positive foreign direct investment. D. positive net capital inflow.
The De Beers Company, one of the longest-lived monopolies, is facing increasing competition. One source of competition comes from people who might resell their previously owned diamonds. Why is De Beers worried that people might resell their previously
owned diamonds? A) because De Beers will not be able to guarantee the quality of previously owned diamonds and fears that its reputation might be harmed B) because the availability of previously owned diamonds would increase the market demand for diamonds and dilute De Beers' monopoly C) because previously owned diamonds would be a close substitute to newly mined diamonds and would therefore reduce De Beers' market power D) because the availability of previously owned diamonds would make the market demand curve for diamonds more inelastic and force De Beers to lower its price