JoAnn considers cola and plain sparkling water to be good substitutes. Suppose the price of sugar, a key ingredient used to produce cola, falls. According to the substitution effect, which of the following is most likely to occur?
A. JoAnn will purchase less cola and more sparkling water.
B. JoAnn will purchase more cola and less sparkling water.
C. JoAnn will purchase more of all goods due to her higher real income.
D. JoAnn's demand curve will decrease (shift in), causing her to purchase less cola.
Answer: B
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The idea that additional spending on research and development will produce additional knowledge that may further increase the productivity of capital is an argument used by some economists to claim that knowledge is subject to ________ returns
A) decreasing B) increasing C) constant D) negative
As prices of an input changes, the isocost line will ________ to reflect more or less of the total amount spent in production
Fill in the blank(s) with the appropriate word(s).