An increase in the price of gasoline shifts the demand for tires to the
A. left, because gasoline and tires are substitutes.
B. left, because gasoline and tires are normally used together.
C. right, because gasoline and tires are substitutes.
D. right, because gasoline and tires are normally used together.
Answer: B
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Refer to the above figure. Excess quantity demanded will exist when
A) the price is between $0 and $6. B) the price equals $6. C) the price equals $10. D) quantity demanded equals 3.
If the economy experiences a recessionary gap then:
A. aggregate expenditures exceed the level of spending necessary to provide for full employment. B. Keynesian economics would recommend a reduction in government spending or an increase in taxes. C. Keynesian economics would recommend an increase in government spending or a decrease in taxes. D. the equilibrium level of output and income is above full employment.
The economic incentive for third-degree price discrimination is based upon ________.
A. differences among sellers' costs B. a desire to evade antitrust legislation C. prejudices of business managers D. differences among buyers' elasticities of demand
U.S. goods will become relatively less expensive than goods from other countries if prices were to:
A. increase in the United States only. B. decrease in the United States only. C. increase in the United States and foreign countries at the same rate. D. decrease in the United States and foreign countries at the same rate.