A compensated increase in the price of a good:
A. causes the consumer to buy more of the good if the income effect is larger than the substitution effect.
B. causes the consumer to buy more of the good if the income effect is smaller than the substitution effect.
C. always causes the consumer to buy more of that good.
D. always causes the consumer to buy less of that good.
D. always causes the consumer to buy less of that good.
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A small decrease in a production quota will have a large impact on the support price if:
A) demand is completely elastic. B) demand is highly (but not completely) elastic. C) demand is inelastic. D) The demand elasticity does not affect the price outcomes of a quota program.
An example of an explicit cost of production would be the
a. cost of forgone labor earnings for an entrepreneur. b. lost opportunity to invest in capital markets when the money is invested in one's business. c. lease payments for the land on which a firm's factory stands. d. Both a and c are correct.
What are the different types of trade barriers? What are the arguments for trade barriers? What are the consequences of trade barriers?
What will be an ideal response?
The ability of a firm to charge a price greater than marginal cost is called
A) monopoly power. B) price-making power. C) cost-plus pricing. D) market power.