If the demand curve for bologna shifts to the right as income falls then bologna is a(n):
A. inferior good.
B. complementary good.
C. normal good.
D. substitute good.
Answer: A
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Katie finds that the marginal utility from a compact disc is 30 and the marginal utility from a pizza is 10. The price of a compact disc is $15 and the price of a pizza is $10. In order to increase her utility, Katie should
A) consume more compact discs and fewer pizzas. B) consume fewer compact discs and more pizzas. C) not change her consumption of pizza and compact discs. D) consume fewer compact discs and fewer pizzas.
If market price is greater than the minimum of AVC but below the minimum of AC, then
A) the firm will shut down. B) revenue covers variable costs and some of the fixed costs and profit is positive. C) revenue covers variable costs and some of the fixed costs, although profit is negative. D) economic profit is zero.
All of the following are true regarding transfer prices except which one?
A) The transfer price is the internal firm price on an input that input-producing division charges the input-using division. B) The transfer price is the internal firm price on an input that input-using division charges the input-producing division. C) Law in many nations state that a transfer price must equal the price charged to an independent customer. D) Transfer prices can affect the taxes a firm must pay.
If the electronics market is experiencing a shortage in the supply of mobile phones being sold at a cost that buyers are more than willing to pay for, then: a. the selling price is higher than the equilibrium price
b. the equilibrium price is higher than the selling price. c. the quantity demanded is less than the quantity supplied. d. the shortage could be eliminated by lowering the price.