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. a decrease in the buyer's reservation price.
B. the substitution effect of a price change.
C. the income effect of a price change.
D. an increase in the buyer's reservation price.
Answer: C
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If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.
Briefly describe the role of government in the economy. How are these government activities financed?
What will be an ideal response?
Suppose a monopoly's inverse demand curve is P = 100 -Q, it produces a product with a constant marginal cost of 20, and it has no fixed costs. How much more or less is the deadweight loss if the monopoly can practice perfect price discrimination compared to it practicing uniform pricing?
A) The deadweight loss is smaller by 800. B) The deadweight loss is greater by 800. C) The deadweight loss is smaller by 1600. D) The deadweight loss is greater by 1600.
Performance compensation that is tied to outcomes out of the employees' control will provide employees with the incentive to work hard.
Answer the following statement true (T) or false (F)