The substitution effect of a price change is the change in consumption that results from the movement to a new indifference curve
a. True
b. False
Indicate whether the statement is true or false
False
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In discussions of barriers to entry, what is meant by the term "virtuous cycle"?
A) A virtuous cycle refers to successful research and development that leads to information that is used to develop other new products. B) A virtuous cycle refers to the situation where the pursuit of self-interest in establishing an entry barrier leads to an increase in social welfare (the "invisible hand"). C) A virtuous cycle refers to a situation where if a firm can attract enough customers initially, it can attract additional customers because its product's value has been increased by other customers using it, which attracts even more customers. D) A virtuous cycle refers to a firm using the profits from a monopoly in one market to establish a monopoly in another market.
The main international repercussion of either a fiscal expansion or monetary contraction is to
A. raise interest rates and the exchange rate, thereby crowding out net exports. B. raise interest rates and lower the exchange rate, thereby crowding in net exports. C. lower interest rates and the exchange rate, thereby crowding in net exports. D. lower interest rates and raise the exchange rate, thereby crowding out net exports.
The real balance effect is one of the
A) reasons why an AD curve is downward-sloping. B) shifters of an AD curve. C) reasons why a short-run aggregate supply curve can be derived. D) shifters of a short-run aggregate supply curve.
Ceteris paribus, an increase in the number of sellers of running shoes causes equilibrium price to
A. Increase and equilibrium quantity to increase. B. Increase and equilibrium quantity to decrease. C. Decrease and equilibrium quantity to increase. D. Decrease and equilibrium quantity to decrease.