Answer the following questions true (T) or false (F)
1. If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now.
2. The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product.
3. If the price of peaches, a substitute for plums, increases the demand for plums will decrease.
1. FALSE
2. FALSE
3. FALSE
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Suppose a perfectly competitive firm wants to increase its level of output profitably. To do this, the firm needs to
a. find a way to lower its marginal cost. b. should raise its price to sell any additional output. c. should lower its price to sell any additional output. d. will not be able to sell the additional output at any price because of the many other competitive firms that exist.
Which of the following Lorenz curves is closest to the diagonal line?
A. The after-transfer income distribution B. The after-tax income distribution C. The before-tax distribution of income D. The before-tax, before-transfer income distribution
Some monopolistically competitive firms differentiate their products simply by opening a new store at a different location.
Answer the following statement true (T) or false (F)
Compare the features of the classical economic model to the Keynesian economic model. How do these models influence the aggregate demand curve and the aggregate supply curve? Which model, in your opinion, benefits the economy in the long run?