Use the above figure. When the budget line rotates from "b" to "c"
A. the price of product K increases and the quantity demanded of product K decreases.
B. the price of product J increases and the quantity demanded of product J decreases.
C. the price of product K decreases and the quantity demanded of product K increases.
D. the price of product J decreases and the quantity demanded of product J increases.
Answer: A
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On Green Island, the demand for pencils is perfectly elastic and the supply of pencils is perfectly inelastic. If a sales tax on pencils is introduced
A) the tax is split evenly between the buyers and sellers. B) the buyers pay the entire tax. C) no one pays the tax. D) the sellers pay the entire tax.
The severe oil shortages of the 1970s in the US created:
A. cost push inflation. B. demand pull inflation. C. a recession. D. an increase in the velocity of money.
If the demand for a good is highly inelastic, a tax on the good
a. places the burden of the tax equally on buyers and sellers b. permits sellers to pass most of the cost increase resulting from the tax on to the consumers of the product c. reduces the profits earned by sellers since they must write the check to pay the tax d. makes the demand more inelastic e. makes the demand more elastic
When analyzing the economy as a whole, ________ substitution from one market to another is impossible.
a) macroeconomic b) externality c) microeconomic d) aggregate