If the demand for used cars decreases after the price of a new car falls, used cars and new cars are
A) substitute goods.
B) inferior goods.
C) normal goods.
D) complementary goods.
E) The questions errs because it is the quantity of used cars, NOT the demand for used cars, that will change when the price of a new car falls.
A
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A tax that varies directly with the income of the person—the higher the income, the higher the tax rate—is known as a(n)
a. regressive tax b. progressive tax c. proportional tax d. flat tax e. excise tax
In the long run the prices charged by a firm in monopolistic competition will be
a. high enough to provide profits to the firm. b. so low that many firms will drop out of the industry. c. equal to marginal cost. d. equal to average cost, including the opportunity cost of capital.
During the late 1990s in the United States, aggregate demand rose sharply but the price level increased much more slowly. This might be because during this period, firms:
A. increased their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be steeper. B. were reluctant to increase their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be flatter. C. increased their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be flatter. D. were reluctant to increase their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be steeper.
To an economist, the four factors of production are
A. Entrepreneurship, machinery, workers, and profit. B. Labor, workers, profit, and services. C. Land, labor, capital, and entrepreneurship. D. None of the choices are correct.