If the price of lattes, a normal good you enjoy, falls, then
A) the income effect which causes you to increase your latte consumption outweighs the substitution effect which causes you to reduce your latte consumption, resulting in more lattes purchased.
B) the income and substitution effects offset each other but the price effect leads you to buy more lattes.
C) both the income and substitution effects lead you to buy more lattes.
D) the substitution effect which causes you to increase your latte consumption outweighs the income effect which causes you to reduce your latte consumption, resulting in more lattes purchased.
C
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A price maker is a firm that:
A) has the power to affect the price of the product it sells. B) earns economic profits in both the short run and the long run. C) can sell any quantity of its product at the prevailing market price. D) sells its products at a price equal to the marginal cost of production.
How does a market system prevent people from getting as many goods and services as they wish?
A) In a market system, firms can charge any price they want, thus preventing poor people from getting as many goods and services as they wish. B) Governments interfere with the market mechanism to influence the allocation of goods and services. C) The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor. D) The government imposes taxes on those who earn beyond a certain amount of income.
The amount of cost cutting technical innovation introduced into a production process is a function of:
A) technology only. B) technology and consumer acceptance. C) consumer acceptance only. D) none of the above.
Which of the following correctly completes this statement? The monopolist's marginal revenue
A) will be greater than price. B) will be less than price. C) will be equal to price. D) will be greater than total revenues.