If the demand for gadgets increases as a result of a decrease in the price of widgets, the widgets and gadgets are:
A. elastically demanded.
B. complementary goods.
C. normal goods.
D. substitute goods.
Answer: B
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All of the following are examples of normative statements EXCEPT:
A. Output per person typically grows more slowly than output per worker. B. Low unemployment is more desirable than low inflation. C. Output per person should increase at an average annual rate of 5 percent. D. High rates of economic growth are preferable to low rates.
A production function of the form Q = 40 L.75 K.20exhibits ________ in the long run.
A. diminishing returns to the variable input B. decreasing returns to scale C. increasing returns to scale D. constant returns to scale
Economic theory predicts that people make choices in a manner that
A) makes them well liked by others. B) makes them better off. C) reflects the fact that resources are unlimited. D) shows that they do not respond to monetary incentives.