The demand curve for a perfectly competitive firm is horizontal because
A) consumers are willing to pay any price to obtain its product.
B) its production decisions cannot influence the market price.
C) the firm profits from setting its price higher than the market price.
D) its product is easy for consumers to differentiate from those of other firms.
Answer: B
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Consider the income and substitution effects corresponding to an increase in the price of X. Which of the following are not possible?
a. The substitution effect on X is positive and the income effect is negative. b. The substitution effect on X is positive and the income effect is negative. c. The substitution effect on Y is negative and the income effect on X in negative. d. The income effect on both goods is positive.
If the demand for one good decreases when the price of another good increases, the two goods are ________ goods
A) normal B) inferior C) complementary D) substitute
Why can’t the government sell surplus agricultural products it has purchased domestically?
What will be an ideal response?
Supporters of supply side economics believe that
a. government should be used as a tool to increase demand for goods b. demand for goods increases when prices rise c. taxes have a strong negative influence on economic output d. tax cuts have little impact on worker productivity