Refer to the information provided in Figure 3.2 below to answer the question(s) that follow.
Figure 3.2Refer to Figure 3.2. Which of the following would be most likely to cause the demand for macaroni and cheese to shift from D1 to D0?
A. an increase in the price of flour used to make macaroni and cheese
B. an increase in income, assuming macaroni and cheese is a normal good
C. an increase in the price of macaroni and cheese
D. an increase in the quantity demanded for macaroni and cheese
Answer: B
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A) Firms produce a differentiated product. B) Firms face a downward sloping demand curve. C) Firms produce a homogeneous product. D) There is freedom of entry and exit in the long run.
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a. is equal to the marginal cost of an action b. is equal to explicit cost c. is equal to the next best alternative forgone d. is the total cost of an action