The income effect occurs when an individual switches to another similar good when the price of the preferred good increases

An economic forecast:

a. will always be true. b. is more reliable than a weather forecast. c. will never provide valuable information. d. should not be relied upon to predict economic events. e. is always based upon a Ceteris paribus condition.

Since advertising increases a firm's average total cost, consumers ultimately pay for the cost of advertising in the form of a higher price in the long run. It is not possible for a firm to end up with a lower profit-maximizing price as the result of advertising

a. True b. False