A 10 percent increase in the price of butter reduces butter consumption by about 5 percent. The increase causes households to
a. spend more on butter.
b. spend less on butter.
c. spend the same amount on butter.
d. consume more goods like bread that are complements of butter.
A
Economics
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The above figure shows supply and demand curves for milk. In an effort to help farms, the government passes a law that establishes a $3 per gallon price support, but allows farmers to decide how much milk to produce
The government then provides a deficiency payment to guarantee that the farmers receive $3 per gallon. The required deficiency payment equals A) b + c + f + g + h + i + j. B) b + c + f + g + h + i. C) f + g. D) b + c.
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