Economists maintain that the price of a product has no effect on demand. How can this be true?
When constructing the demand curve, price is the independent variable that determines quantity demanded. Economists who use the word demand refer to this schedule, which reflects every possible price and its respective quantity demanded. Price affects quantity demanded, while other factors, such as consumers' income, will influence the demand for the product.
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Suppose Campus Books, a profit-maximizing firm, is the only supplier of the textbook for a given class. The marginal cost of supplying each book is constant and equal to $10, and Campus Books has no fixed costs. The table below shows the reservation prices of the eight students enrolled in the class.StudentReservation Price($/Book)Q60R54S48T42U36V30W30X30 What is the socially optimal number of books?
A. 6 B. 7 C. 5 D. 8
Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups' perceived
A) supply of labor. B) value of marginal product. C) marginal cost of labor. D) minimum wage.
What must occur for a good to violate the Law of Demand?
A. The good must be normal and the income effect must be larger than the substitution effect. B. The good must be normal and the substitution effect must be larger than the income effect. C. The good must be inferior and the income effect must be larger than the substitution effect. D. The good must be inferior and the substitution effect must be larger than the income effect.
In the kinked-demand model of noncollusive oligopoly, if one firm increases its price, the most likely reaction of the other firms will be to:
A. increase their prices. B. decrease their prices. C. not change their prices. D. fix prices.