Examine the accuracy of the following statement: "Given that burgers and fries are complementary goods, if the price of fries increases the demand for both goods will fall."
What will be an ideal response?
The statement is not entirely accurate. An increase in the price of fries will reduce the demand for burgers but will lead to a fall in the quantity of fries demanded. This fall in quantity demanded will be shown as an upward movement along the demand curve. As the price of French fries increases, the demand curve for burgers will shift to the left.
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The development of new technology reduces the cost of producing calculators. In addition, assume that consumers have cut back on their scheduled purchases in anticipation of further cost-saving developments. As a result, we can expect
A. a decrease in price but no predictable change in output. B. a decrease in output but no predictable change in price. C. an increase in output but no predictable change in price. D. a predictable decrease in both output and price.
In their relationship with stockholders, a firm's managers act
A) as agents. B) as principals. C) in loco parentis. D) as proprietors.
Businesses produce goods and services and sell them to households and governments. The market where this interaction takes place is called the goods market.
Answer the following statement true (T) or false (F)
All of the following are important sources of growth except:
A. capital accumulation. B. decreasing returns to scale. C. institutions with incentives compatible with growth. D. technological development.