Which of the following statements represents a correct and sequentially accurate economic explanation?
A) Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y rises.
B) Goods X and Y are substitutes. The price of X rises, the demand for X falls, and the demand for Y rises.
C) Goods X and Y are substitutes. The price of X falls, the demand for X rises, and the quantity demanded of Y rises.
D) Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y falls.
E) Goods X and Y are complements. The price of X falls, the quantity demanded of X rises, and the demand for Y falls.
D
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Refer to the scenario above. Suppose Pat can impose a fine of $70 if Joe chooses to keep the money and the cost of imposing such a fine to Pat is $10. Which of the following is likely to happen if Pat is known to be vengeful?
A) Joe will choose to split the money into two parts if Pat gives it to him. B) Joe will choose to keep the entire money for himself if Pat gives it to him. C) Pat will not give the money to Joe. D) An unique equilibrium will not occur.
One way to view the cost structure of monopolistic competition is to say that the cost of product differentiation is equal to
A) the difference between marginal revenue and marginal cost. B) the difference between the cost of production for a monopolistically competitive firm in an open market and the minimum average total cost. C) the sum of price and marginal cost. D) the sum of marginal cost and minimum average cost.