The price of a large pepperoni pizza used to be $12, but this week the price rose to $18. With a budget of just $28, you can't afford as many pizzas at the higher price. This change in consumer behavior reflects the
A) real income effect.
B) substitution effect.
C) nominal income effect.
D) concept of diminishing marginal utility.
Answer: A
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Which of the following statements about business organizations is TRUE?
A) Partnerships are more common than proprietorships and are responsible for a larger percentage of business receipts. B) Proprietorships are more common than either partnerships or corporations but are responsible for the smallest share of total business receipts. C) Corporations are larger in number than either proprietorships or partnerships and also receive a larger percentage of total business receipts. D) Partnerships are larger than both proprietorships and corporations but are less numerous than corporations.
The output effect of a change in the wage rate on a firm's demand for labor input will be greater:
a. the larger the share of labor costs in total costs and the greater the price elasticity of demand for output. b. the larger the share of labor costs in total costs and the smaller the price elasticity of demand for output. c. the larger the share of labor costs in total costs and the higher the quantity demanded. d. the smaller the possibilities of substituting capital for labor.