Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by
A. the price effect.
B. a rightward shift in the demand curve for hamburgers.
C. the substitution effect.
D. the income effect.
Answer: D
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Regulation
A) always increases consumer surplus. B) passes the cost-benefit test. C) solves market failures of all size. D) None of the above.
A few sellers may behave as if they operate in a perfectly competitive market if the market demand is:
A) highly inelastic. B) very elastic. C) unitary elastic. D) composed of many small buyers.
The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
Which of the following is held constant when constructing a production possibilities curve?
A. the amount of total resources used B. combination of goods produced C. the price level D. all of these