You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:
A. an increase in the buyer's reservation price.
B. a decrease in the buyer's reservation price.
C. the substitution effect of a price change.
D. the income effect of a price change.
Answer: D
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A profit-maximizing firm will hire an additional unit of a resource as long as the
a. marginal product of the resource is greater than the marginal resource cost b. marginal product of the resource is less than the marginal resource cost c. marginal revenue product of the resource is greater than the marginal resource cost d. marginal revenue product of the resource is less than the marginal resource cost e. price of the resource is less than the marginal resource cost
The phrase "no such thing as a free lunch" means
a. people must face tradeoffs. b. rational people think at the margin. c. people respond to incentives. d. trade can make everyone better off.
People who hold well-diversified portfolios of stocks have greatly reduced or eliminated
a. firm-specific risk, and so they do not need to worry about their wealth decreasing as a result of recessions. b. market risk, and so they do not need to worry about their wealth decreasing as a result of recessions. c. firm-specific risk, but still they have reason to worry about their wealth decreasing as a result of recessions. d. market risk, but still they have reason to worry about their wealth decreasing as a result of recessions.
If M doubled and V fell by 50%, what would happen to PQ?
What will be an ideal response?