Firms in a monopolistically competitive market follow the same MR = MC profit maximization rule used by firms in other market structures

The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then

A) the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded. B) the income and substitution effects offset each other but the price effect of an inferior good leads you to buy more canned peas. C) both the income and substitution effects reinforce each other to decrease the quantity demanded. D) the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.

In a two-country, two-commodity model, if a country has higher labor productivity in producing both the goods, it must produce and export both the goods to the other country.

Answer the following statement true (T) or false (F)