All other factors held constant, when McDonald's raises the price of its Quarter Pounder by 50 cents,
A) there is likely to be a decrease in the quantity of Taco Bell's Chalupas demanded, assuming the Quarter Pounder and Chalupas are substitutes.
B) there is likely to be an increase in demand for Taco Bell's Chalupas, assuming the Quarter Pounder and Chalupas are substitutes.
C) there is likely to be a decrease in demand for Taco Bell's Chalupas, assuming the Quarter Pounder and Chalupas are substitutes.
D) there is likely to be an increase in demand for McDonald's Quarter Pounder, assuming the Quarter Pounder and Chalupas are substitutes.
Answer: B
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In an economy with no inflation, explain why interest rates are positive
What will be an ideal response?
The income effect of a decrease in the wage rate causes the quantity of labor supplied to
a. increase b. increase only if the individual desires more leisure time c. increase only if the substitution effect outweighs the income effect d. decrease e. decrease only if the substitution effect is weaker than the income effect
Investment spending is insensitive to changes in the interest rate and the SRAS curve is upward sloping. According to a monetarist, an increase in the money supply will __________ Real GDP. According to a Keynesian, an increase in the money supply will __________ Real GDP
A) raise; not change B) not change; raise C) lower; lower D) raise; lower E) none of the above
Exhibit 16-1 Money market demand and supply curves
Starting from an equilibrium at E1 in Exhibit 16-1, a leftward shift of the money supply curve from MS1 to MS2 would cause an excess:
A. demand for money, leading people to sell bonds. B. demand for money, leading people to buy bonds. C. supply of money, leading people to sell bonds. D. supply of money, leading people to buy bonds.