A perfectly competitive firm's marginal revenue is:
A. sometimes below and sometimes above the selling price.
B. less than the selling price.
C. greater than the selling price.
D. equal to the selling price.
Answer: D
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Which of the following should be held constant when calculating an income elasticity of demand?
a. the price of the good b. prices of related goods c. tastes d. All of the above should be held constant.
When the price of a normal good decreases,
a. both the income and substitution effects encourage the consumer to purchase more of the good. b. both the income and substitution effects encourage the consumer to purchase less of the good. c. the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good. d. the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.