If goods A and B are complements, and if the price of good B rises, how will this affect the market equilibrium for good A?
a. Price will fall and quantity will rise.
b. Price will rise and quantity will fall.
c. Price and quantity will both fall.
d. Price and quantity will both rise.
c
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If the marginal propensity to save is 0.25, then a $10,000 decrease in disposable income will
a. increase consumption by $7,500. b. increase consumption by $2,500. c. decrease consumption by $7,500. d. decrease consumption by $2,500.
Under conditions of perfect competition, if losses occur in an industry, market forces may come into play to
a. reduce supply. b. lower average revenue. c. increase supply. d. attract new firms.
It is likely that the owners have little to do with the day-to-day management of a firm in the case of
A) partnerships only. B) proprietorships only. C) corporations only. D) partnerships and corporations.
The size of the spending multiplier depends on the marginal propensity to consume (MPC)
a. True b. False Indicate whether the statement is true or false