In the figure above, if price INCREASES from $40 to $60, an arrow representing the PRICE effect
A. will point upward.
B. will point downward.
C. will be longer than (and in opposite direction of) the arrow representing the quantity effect.
D. will be shorter than (and in the opposite direction of) the arrow representing the quantity effect.
E. both a and c
Answer: E
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Many large universities rent out parts of their campuses to conference groups during the summer because such groups cause little damage, require little staff attention, and bring in large amounts of income. A university's decision to rent its campus to a conference group is most clearly based on
a. the idea that price and quantity selection is a single decision. b. the principle of decreasing returns to scale. c. marginal analysis. d. average cost considerations.