Suppose that if a local McDonald's restaurant reduces the price of a Big Mac from $4.00 to $3.25, the number of Big Macs it sells per day will increase from 4 to 5. Explain the output effect and the price effect resulting from this change
Using a graph, illustrate both the loss in revenue from selling each of the first 4 Big Macs for $0.75 less and the additional revenue from selling 1 more Big Mac. What is the total change in revenue received which results from this price decrease?
The 1 extra Big Mac sold is the output effect. The $0.75 cents less it receives for each Big Mac sold at the lower price is the price effect. The total change in revenue resulting from the price decrease is $3.25 - $3.00 = $0.25.
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A) interest rate effect. B) price effect. C) international trade effect. D) wealth effect.
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A) infinite B) positive C) negative D) zero
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a. primary level in mid-income countries b. secondary level in low-income countries c. tertiary level in high-income countries d. primary level in low-income countries
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