Your allergies are bad this summer so your allergist writes you a prescription to relieve your symptoms. When you get to the pharmacy, you notice the name brand allergy medicine is more expensive than its generic equivalent. You purchase the generic
equivalent and demonstrate all of the following EXCEPT
A) the principle of substitution of one product for another.
B) the principle of diminishing marginal utility.
C) when price decreases, the quantity demanded increases.
D) a price change may affect consumer optimum.
Answer: B
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The question of "How are goods and services produced?" most closely addresses which of the following issues?
A) Why are Christmas trees popular only in December? B) Should contractors build residential housing or shopping malls? C) Is income distributed fairly in the United States? D) Should Ford build SUVs or luxury cars? E) Should Ford use expensive industrial robots or inexpensive Mexican autoworkers to produce SUVs?
Which of the following statements is true about buying an old factory?
A. It is a financial investment but not an economic investment. B. It is an economic investment but not a financial investment. C. It is both an economic and a financial investment. D. It is neither an economic nor a financial investment.
If the market price for a crop is $4.00 a bushel, and the price support is $3.00, then raising the price support to $5.00
A. will cause the price received by farmers to rise to $5.00. B. will cause the price received by farmers to rise to $4.00. C. will cause nothing to happen. D. will cause the price received by farmers to fall.
One way that government can increase the production of goods that have external benefits is to
A) tax the activity. B) subsidize the activity. C) use marketable permits. D) Both answers B and C are correct.