If the price of movies on DVD rises while the price of movies purchased on demand through the Internet remains the same, the law of demand predicts that consumers will:
A. substitute movies on the Internet for movies on DVD.
B. buy only movies on the Internet.
C. buy only movies on DVD.
D. substitute movies on DVD for movies on the Internet.
Answer: A
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The Bureau of Economic Analysis excludes from its calculation of GDP most of the goods produced that are not sold in markets because
A) their production has no real costs. B) their value is implicitly included in the prices of marketed goods. C) there is no satisfactory way to measure their value. D) they do not contribute to national welfare. E) this would be inappropriate for an exchange economy.
Imagine that Odyssey National is a brand new bank, and that its required reserve ratio is 10 percent. If it accepts a $1,000 cash deposit, then, excluding the $1,000 initial deposit, the banking system can increase the money supply by:
a. $900. b. $910. c. $1,000. d. $9,000. e. $10,000.