A consumer has been buying 3 magazines and 2 books a month for many months. The price of books then increases. To attain a new optimum, the consumer will
A) buy more magazines because they are now relatively more valuable than they were before, while continuing to buy the same number of books.
B) buy more books because they are now relatively more valuable than they were before.
C) buy the same number of books and magazines as before because they provide different types of utility.
D) buy fewer books than before because they are relatively more expensive than they were before.
Answer: D
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The figure above shows the market for umbrellas in Sunville. Suppose one firm owns all umbrella stores in Sunville and charges $40 per umbrella. In this situation, the market for umbrellas is
A) efficient, with no deadweight loss but also no surplus. B) inefficient, with a deadweight loss of $2,666.67. C) inefficient, with a deadweight loss of $1,333.33. D) efficient, generating a total surplus of more than $10,000.
Explain the role of advertising in monopolistic competition. Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve, its MC curve, its demand curve, and its MR curve
What will be an ideal response?
If the marginal propensity to consume in a country is 0.5, then the value of the tax multiplier is: a. ?1
b. ?0.5. c. ?2. d. ?1.5.
Game theory applies to problems that arise in
A. perfect competition. B. monopolies. C. oligopolies. D. pure competition.