Except for the case of Giffen goods, the substitution effect always tells us that a consumer will consume less (or at least no more) of a good whose price has increased.
Answer the following statement true (T) or false (F)
False
Rationale: The statement is true --- except that it applies to Giffen goods as well.
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Two firms are creating apps with their profits in the payoff matrix below: Firm B? $.99 app$1.99 appFirm A$.99 app($1m, $1m)($100k, $5m)?$1.99 app($6m, $120k)($250k, $250k)Without collusion, what will each firm decide to sell their app for?
A. Firm B sells the app for $.99 while Firm A sells the app for $1.99 B. Both firms will sell the app for $.99 C. Both firms will sell the app for $1.99 D. Firm A sells the app for $.99 while Firm B sells the app for $1.99
A significant amount of positive consumer surplus is the reason why sometimes a shopper regrets having bought a particular item
Indicate whether the statement is true or false.
If the world terms of trade equal those of country H, then
A) country H but not country F will gain from trade. B) country H and country F will both gain from trade. C) neither country H nor F will gain from trade. D) only the country whose government subsidizes its exports will gain. E) country F but not country H will gain from trade.
If reservation prices are positively correlated, then
A) pure bundling cannot increase a firm's profit. B) pure bundling can increase a firm's profit. C) it is unclear whether or not pure bundling can increase a firm's profit. D) consumers lose leverage over firms.