Answer the following questions true (T) or false (F)
1. An inferior good is a good for which the quantity demanded increases as the price decreases, holding everything else constant.
2. The substitution effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.
3. If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.
1. FALSE
2. TRUE
3. TRUE
You might also like to view...
Which of the following statements is true about marginal revenue?
A) If marginal revenue is zero, it means that quantity demanded falls to zero when a firm changes its price. B) Marginal revenue increases as price falls and quantity sold increases. C) If marginal revenue is negative, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. D) If marginal revenue is positive, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price.
The law of demand states that price and quantity demanded are
A) directly related, ceteris paribus. B) inversely related, ceteris paribus. C) independent. D) positively related, ceteris paribus.