The substitution effect of a price change is depicted by a
a. movement along the budget constraint holding satisfaction constant.
b. shift in the budget constraint at the old prices.
c. movement along the consumer's new indifference curve at the new prices.
d. movement along the original indifference curve to the point where the marginal rate of substitution equals the price ratio for the new set of prices.
d
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Is it possible for the total market demand for a good at the prevailing price to be inelastic while the demand facing any one seller of the good is highly elastic?
A) No, because each seller's demand is a part of the total demand. B) No, because if this were the case the price would fall until the market demand became elastic. C) No, because if this were the case the price would rise until the market demand became elastic. D) Yes, and it's actually quite common.
The FOMC directive contains a target growth rate for
A) nominal GDP. B) real GDP. C) the inflation rate. D) M2.