The price of a new textbook increases from $105 to $130 while the price of used copies of the textbook increases from $45 to $55. Other things equal, we would expect to observe
A. the quantity demanded of the used textbook to increase while the quantity demanded of the new textbook to fall.
B. the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.
C. the demand for the new textbook to increase while the demand for the used textbook to decrease.
D. the quantity demanded of both to fall.
Answer: B
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Suzy spends all of her income on potato chips and textbooks. To maximize her total utility, she should
a. allocate her income so that the marginal utilities of potato chips and textbooks are equal b. allocate her income so that the marginal utilities per dollar spent on potato chips and textbooks are equal c. change her eating habits d. choose a consumption point that is inside her budget constraint e. allocate her income so that the total utilities of potato chips and textbooks are equal
Which of the following observations concerning price discrimination is true?
A. It only occurs in monopolies. B. It is easier for a monopolist than for a firm that is affected by competition. C. It means that sales to all customers are equally profitable. D. It is considered as a bad business practice under all circumstance.
Refer to Figure 5.1. In which graph does a shift from BL1 to BL2 represent an increase in the consumer's income?
A. A
B. B
C. C
D. D
According to the law of supply:
A. more of a good is desired by consumers as the price falls. B. less of a good is desired by consumers as the price rises. C. more of a good will be offered by suppliers as the price rises. D. less of a good will be offered by suppliers as the price rises.