The substitution effect of a change in the price of bananas refers to the way in which a change in the
a. price of a substitute affects the demand for bananas
b. price of bananas affects the ability to buy them
c. relative price of bananas changes demand for them
d. relative price of bananas changes the quantity demanded of bananas
e. price of a substitute affects the quantity demanded of bananas
D
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If the Fed is concerned about a possible recession, it ________ the federal funds rate and, in response, long-term interest rates ________ by a ________ amount than the change in short-term rates
A) raises; increase; larger B) lowers; increase; smaller C) raises; decrease; larger D) lowers; decrease; smaller E) raises; increase; smaller
Suppose we have the following information about a car manufacturer: car sales $1000M, steal purchases $600M, wages $300M, interest on business loans $50M, and profits $50M. What is its contribution to GDP using the product approach?
A) $1000M B) $600M C) $400M D) $350M
If a cigarette manufacturer sells its cigarettes to a distributor and contractually restricts the distributor from reselling the cigarettes outside the state of New York, this is an example of ________.
A) a tying arrangement B) territorial confinement C) a requirements contract D) exclusive dealing
Derek has $1 to spend at the grocery store. An apple, an orange, and a banana cost $0.50 each. If Derek's MUA/PA (ratio of marginal utility to price) of an apple is 45, MUO/PO of an orange is 38, and MUB/PB of a banana is 52, he will purchase a(n) _____ first and a(n) _____ second
a. apple; orange b. orange; apple c. banana; orange d. banana; apple e. orange; banana