According to the substitution effect, a decrease in the price of a product leads to an increase in the quantity demanded because buyers:
A. purchase more complementary goods.
B. purchase more substitute goods.
C. purchase fewer substitute goods.
D. have more real income.
Answer: C
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A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. If the firm sells each computer for $650, then how many hours a day should the firm employ Pam to maximize its net benefit from her employment?
A. 4 hours B. 3 hours C. 2 hours D. 1 hour
A French tourist spent $1,200 in the U.S this year. This transaction will lead to a(n) ________
A) decrease in the GDP of U.S. B) increase in the GDP of France C) decrease in the GDP of France D) increase in the GDP of U.S.
Term premium refers to
A) the average difference over a long period of the interest rate on long-term bonds and the interest rate on the short-term federal funds rate. B) the average difference over a long period of the interest rate on short-term financial instruments and the interest rate on the discount rate. C) the difference between the corporate bond rate and the risk-free rate of Treasury bonds. D) the difference between prime rate and the discount rate.
Why is a monopoly inefficient?
What will be an ideal response?