When the price of one fruit increases, consumers buy more of another fruit. This situation is an illustration of:
a. The rationing function of prices
b. The income effect
c. The substitution effect
d. Diminishing marginal utility
Answer: c. The substitution effect
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If the average productivity of labor equals the marginal productivity of labor, then
A) the average productivity of labor is at a maximum. B) the marginal productivity of labor is at a maximum. C) Both A and B above. D) Neither A nor B above.
Refer to the above figure. At demand curve D2, price equals ________ and economic rent equals ________
A) OF; KHG B) OF; FHGO C) OE; EKGO D) OE; KHG
The tax burden falls more heavily on the side of the market that is more inelastic
a. True b. False Indicate whether the statement is true or false
Deflation is a:
A. steady, unchanging aggregate price level. B. sustained fall in the aggregate price level. C. steady fall in the exchange rate. D. sustained increase in the aggregate price level.