The substitution effect of a price change refers to
A) the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.
B) the shift in the demand curve due to a change in purchasing power brought about by the price change.
C) the movement along the demand curve due to a change in purchasing power brought about by the price change.
D) the shift of a demand curve when the price of a substitute good changes.
A
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The permanent-income hypothesis was developed in the 1950s by economist
A) Edward Prescott. B) James Tobin. C) Robert Solow. D) Milton Friedman.
A loan officer uses a credit scoring system to
A) compare the interest rate on a loan to interest rates on other assets with comparable risk. B) keep track of the fraction of a bank's assets tied up in loans to a single individual or business. C) predict statistically whether an individual is likely to default on a loan. D) match any particular loan with the deposits being used to fund it.
Which of the statements about price discrimination is (are) false?
a. It must be possible to segment the market. b. It must be difficult to transfer the seller's product from one market segment to another. c. Public utilities practice first-degree price discrimination. d. There must be differences in the elasticity of demand from one segment to another. e. c and d
Suppose a company that produces mouthwash branches out into producing toothpaste. If this expansion reduces the average cost per unit, the company must
a. benefit from vertical integration b. benefit from horizontal integration c. experience economies of scale d. experience economies of scope e. have no transaction costs