For a normal good, the substitution and income effects of a price decrease work in the same direction to increase the quantity demanded of that good

Refer to Figure 10-9. If the consumer has $240 to spend on DVDs and CDs, what is the price of a DVD if the budget constraint is BC1?

A) $10 B) $20 C) $24 D) $40

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand

A) the firm would earn monopoly profits. B) the firm would incur a loss. C) economic efficiency would not be achieved. D) the firm would break even.