Which of the following best illustrates the concept of derived demand?
a. A decrease in the price of glass causes the demand for plastic to decrease.
b. An increase in the demand for bread leads to an increase in the demand for flour.
c. A decrease in the price of air travel leads to an increase in the quantity demanded of air travel.
d. An increase in the demand for peanut butter leads to an increase in the demand for jelly.
b
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Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is ________ so supply is ________.
A. 3/2; inelastic B. 2/3; elastic C. 2/3; inelastic D. 3/2; elastic
Refer to the figure above. If there is wage rigidity in the market, how much unemployment is created when the labor demand curve shifts to LD2?
A) 20 units of labor B) 30 units of labor C) 10 units of labor D) 40 units of labor
Which of the following clearly restricts competition?
A) A government policy restricting entry into the market B) A government policy that reduces tariffs on foreign imports C) A business sets price below cost. D) A business sets price above cost. E) Any business pricing scheme that successfully draws customers away from its rivals
Individuals who specialize in activities that lower transaction costs are
A) consumers. B) producers. C) bureaucrats. D) middlemen.