Joe consumes pizza and movies. Pizza and movies are substitutes. According to marginal utility theory, if the price of a pizza rises then
A) the demand curve for pizza shifts leftward.
B) the demand curve for pizza shifts leftward and the demand curve for movies shifts rightward.
C) there is an upward movement along the demand curve for pizza.
D) there is an upward movement along the demand curve for pizza and the demand curve for movies shifts rightward.
D
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In what way is consumer demand different from consumer wants?
a. Demand is only for necessities. b. Demand is only for luxuries. c. Demand takes into account the ability to pay. d. Consumer wants are only for luxuries. e. Consumer wants are only for necessities.
Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10,000 for the year. The machine costs $8,000 and has a useful life of one year. The interest rate is 20 percent. This investment should:
A. Be undertaken because the rate of return is 2 percent greater than the interest rate B. Be undertaken because the rate of return is 5 percent greater than the interest rate C. Be undertaken because the rate of return is 7 percent greater than the interest rate D. Not be undertaken because the rate of return is 7 percent less than the interest rate