Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects
A) work in the same direction to increase quantity demanded.
B) work in the same direction to decrease quantity demanded.
C) work in opposite directions and quantity demanded increases.
D) work in opposite directions and quantity demanded decreases.
A
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At the current level of output, long-run marginal cost is $50 and long-run average cost is $75. This implies that:
A) there are neither economies nor diseconomies of scale. B) there are economies of scale. C) there are diseconomies of scale. D) the cost-output elasticity is greater than one.
Morgan graduates from college and gets a job paying $50,000 a year. While in school, she consumed 4 pounds of chicken and 1 pound of shrimp a month. After she starts work, she consumes 2 pounds of chicken and 3 pounds of shrimp a month
If everything else is held constant, we know that A) chicken and shrimp are normal goods for Morgan. B) chicken is an inferior good and shrimp is a normal good for Morgan. C) chicken is an inferior good for Morgan. D) shrimp is a normal good for Morgan.