If the price of an inferior good increases, the substitution effect encourages the consumer to purchase less of it while the income effect encourages him to purchase more of it

In order to maximize profit, a perfectly competitive firm should select the level of output where

a. marginal revenue equals price b. marginal cost equals marginal revenue c. price exceeds marginal cost d. price exceeds marginal revenue e. total revenue equals total cost

The change in equilibrium quantity of a good is more when the buyers are taxed

a. True b. False Indicate whether the statement is true or false