All else constant, if butter and margarine are substitute goods, then as the price of butter rises,
a. the demand for margarine will fall
b. the quantity of butter demanded will fall
c. the demand for butter will fall
d. the demand for butter will rise
e. butter and margarine will become complementary goods, provided that butter is a normal good
B
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If there are no external costs or benefits, no price or quantity regulations, no taxes or subsidies, and the good is not a public good or a common resource, then efficiency is
A) achieved when a monopoly produces the good. B) achieved when the good is produced in a competitive market. C) achieved when the amount of output exceeds the amount produced in a competitive market. D) unrelated to the amount produced in a competitive market.
Free exit implies that
A. a perfectly competitive firm can never earn a profit. B. firms will always earn below normal profit, as firms can exit the industry at any time they like. C. if an industry's existing firms make excessively high losses, firms are likely to exit the industry. D. the government regulates the number of firms it allows in an industry.