When the price of a normal good decreases, people increase their consumption of the good. The reason is
A) the law of diminishing marginal utility.
B) the substitution and income effects.
C) the substitution effect only.
D) the income effect only.
Answer: B
You might also like to view...
The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
A monopsony is a market situation in which there is only one seller
a. True b. False Indicate whether the statement is true or false
The German inflation rate after World War I was measured in the thousands of percents. This condition is referred to as
a. fundamental inflation. b. environmental inflation. c. hyperinflation. d. episodic inflation.
Refer to the information provided in Figure 8.9 below to answer the question(s) that follow. 
Figure 8.9
Refer to Figure 8.9. If the market price of hay falls to $18, then to maximize profits this farmer should produce
A. 350 bales of hay. B. 500 bales of hay. C. 750 bales of hay. D. a level of output that is indeterminate from this information.