Kara receives a promotion at work, which increases her income. We would expect Kara’s demand for
a. each good she purchases to remain unchanged.
b. normal goods to decrease.
c. substitute goods to increase.
d. inferior goods to decrease.
Answer: d. inferior goods to decrease.
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A firm that generates zero economic profit usually faces
A) negative business profit. B) zero business profit. C) positive business profit. D) business profit equal to half the total revenue.
Society would be better off with more products that create beneficial externalities
a. True b. False Indicate whether the statement is true or false
Suppose that an individual has chosen not to work. Then a change in the wage rate:
A. creates a substitution effect, but no income effect. B. creates an income effect, but no substitution effect. C. creates both and income and substitution effect. D. creates neither an income effect nor a substitution effect.
Figure 11-3
In Figure 11-3, one can tell from the graph that the monopolist will earn a positive profit only if
a.
the price exceeds $3.
b.
the price exceeds $2.
c.
output is less than 60 units.
d.
One cannot tell from the information given.