Assume the price of Advil increases. As a result, you decrease the quantity of Advil purchased each month and purchase more Tylenol. This is an example of the:
a. income effect.
b. utility effect.
c. consumption effect.
d. substitution effect.
d
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Which of the following is NOT true according to Say's law?
A) Producing goods and services generates the means and the willingness to purchase other goods and services. B) Desired expenditures will always be higher than actual expenditures. C) Supply creates its own demand. D) No overproduction is possible in a market economy in the long run.
Price cap regulation is a
A) price ceiling. B) price floor. C) form of marginal cost regulation. D) type of rate of return regulation.
A country producing a combination of 9 units of guns and 6 units of butter would be _____________ (outside/on/inside) the production possibilities curve.
Suppose you operate in a monopolistically competitive market. If you sell your good at a price of $20 and your average cost of production is $15:
A. your market may be in long-run equilibrium. B. you cannot be in short-run equilibrium. C. you should expect competing firms to enter your market and shift the demand curve for your good to the left. D. you should expect competing firms to enter your market and shift the demand curve for your good to the right.