Marginal utility theory predicts that when the price of one good rises, the demand for another good is a substitute increases. This change occurs because of
A) an increase in the marginal utility per dollar from the substitute good.
B) an increase in the marginal utility of the substitute good.
C) a decrease in the marginal utility per dollar from the good whose price has risen.
D) a decrease in the marginal utility of the good whose price has risen.
C
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The law of demand states that, ceteris paribus, an increase in
a. price causes quantity demanded to increase. b. price causes quantity demanded to decrease. c. quantity demanded causes price to increase. d. quantity demanded causes price to decrease.
A binding price ceiling i. causes a surplus. ii. causes a shortage. iii. is set at a price above the equilibrium price. iv. is set at a price below the equilibrium price
a. (ii) only b. (iv) only c. (i) and (iii) only d. (ii) and (iv) only