If bagels and donuts are substitute goods, which of the following is likely to occur if the price of bagels has decreased?
A. A leftward movement along the bagel demand curve.
B. The demand curve for donuts shifts to the right.
C. The demand curve for donuts shifts to the left.
D. The demand curve for bagels shifts to the right.
Answer: C
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If firms in a perfectly competitive industry are earning an economic profit, then in the ________, firms will ________ the industry
A) short run; enter B) long run; enter C) short run; exit D) long run; exit E) More information about the firms' costs and the price of the product is needed to determine if firms enter or exit the industry.
If an increase in the price of Good A causes an increase in the demand for Good B, Goods A and B are said to be complements
a. True b. False Indicate whether the statement is true or false
Assume we have a stock currently worth $100. We also assume the interest rate is zero, and we can buy options for this stock with a strike price of $100. If the stock can rise or fall by $5 with equal probability over the option period, and the option cannot be exercised until the expiration date, what is the time value of the option?
A. $5 B. $10 C. $0 D. None of the answers is correct.
As disposable income grows,
A. both autonomous C and induced C rise. B. both autonomous C and induced C fall. C. autonomous C falls and induced C rises. D. autonomous C stays the same and induced C rises.