The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of

The income effect indicates that:

A) a rise in money income will cause consumers to buy smaller quantities of normal goods. B) when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper. C) consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same. D) when the price of a product falls, a consumer will be able to buy more of it with a specific money income.

In a contingent contract

A) the risk neutral party bears the risk. B) monitoring is not possible. C) the principal will be at a disadvantage. D) the payoffs are dependent upon another variable, such as revenue or profit.