If the price of product X falls and this change increases the demand for product Y, then
A) X and Y are complements.
B) X and Y are substitutes.
C) X is an inferior good.
D) Y is an inferior good.
B
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How does a firm in monopolistic competition decide how much to produce and at what price to offer its product for sale?
What will be an ideal response?
Refer to Figure 9.3. If the government establishes a price ceiling of $1.00, consumer surplus will
A) fall by $50. B) fall by $150. C) remain the same. D) rise by $50. E) rise by $150.
The term "welfare state" describes the idea that:
A. government has a responsibility to promote the economic well-being of its citizens. B. some areas suffer a disproportionate amount of chronic poverty. C. some areas suffer from stagnant economic growth. D. None of these is true.
If a competitive firm is operating in short run equilibrium and then its fixed costs fall by 40 percent, it should: a. use more labor and less capital in current production. b. not change its output
c. increase its output. d. decrease its output.