Cupcakes and granola bars are substitutes in consumption. The price of a granola bar increases so the demand for
A) granola bars will increase, that is, the demand curve will shift rightward.
B) cupcakes will increase, that is, the demand curve will shift rightward.
C) granola bars will decrease, that is, the demand curve will shift leftward.
D) cupcakes will decrease, that is, the demand curve will shift leftward.
B
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Perfect Shots is company specializing in wedding photos and they have a fixed advertising budget. Perfect Shots advertises on the radio and the television and it costs $5,000 per unit of radio advertising and $14,000 per unit of television advertising. At their current advertising levels, the marginal benefit from radio advertising is $5,000 and the marginal benefit from television advertising is
$14,000. Which of the following is true? A) Perfect shots has optimally allocated their advertising budget, but that does not guarantee that they have maximized their profits. B) To optimally allocate their advertising budget, Perfect Shots should increase the amount of advertising in radio and television. C) Perfect shots has optimally allocated their advertising budget, which guarantees they have maximized their profits. D) To optimally allocate their advertising budget, Perfect Shots should decrease the amount of advertising in radio and television.
A higher rent ________ lead to an increase in the quantity of land supplied.
A. will definitely B. will probably C. may D. will not
The law of diminishing marginal returns implies that, in the short run:
A. output must fall beyond a certain point. B. price must fall beyond a certain point. C. the marginal product of the variable input must eventually decrease. D. wages of workers must eventually increase.
Answer the following statements true (T) or false (F)
1) The "sticky price" model is the only one used by macroeconomists. 2) (Consider This) The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories, tools, and warehouses. 3) (Consider This) If a farmer purchases 10 acres of farmland from a neighboring farmer, this would be considered an economic investment. 4) (Consider This) If Ford Motor Company purchases factory equipment previously used by General Motors, this would be considered an economic investment.