When the price of a normal good increases,
a. both the income and substitution effects encourage the consumer to purchase more of the good.
b. both the income and substitution effects encourage the consumer to purchase less of the good.
c. the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good.
d. the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.
b
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Refer to Scenario 9.1. The dominant strategy for Sheb is to place ________ sheep on the commons
A) 4 B) 5 C) Sheb's dominant strategy depends on how man sheep Monty places on the commons. D) Sheb has no dominant strategy.
Assume the marginal revenue from each additional unit of a good sold is 0. In this case, we can conclude that demand for the good is:
A) unit elastic B) perfectly elastic. C) perfectly inelastic. D) relatively inelastic.
After a tax is placed on a good or service, which of the following does NOT occur?
A. The total volume of sales of the good or service increases. B. Buyers pay more for the good or service. C. Sellers receive less when they produce and sell the good or service. D. Government revenues decrease.
When MFC < MRP, a firm in a competitive market will
A. earn fewer profits. B. layoff workers. C. stop hiring more workers. D. hire more workers.