The price of a smartphone increased from $250 to $400 while the price of a smartphone app increased from $1 to $2. The relative price of smartphones in terms of smartphone apps
A) increased from 175 to 350.
B) decreased from 250 to 200.
C) increased from 0.003 to 0.05.
D) decreased from 0.35 to 0.2.
Answer: B
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Which of the following could prevent the opportunistic behavior of firms?
A) efficient contracts B) good reputation C) revealing relevant information about firms D) All of the above
If an individual's supply of labor curve is "backward bending," (that is, labor supply falls at high wage rates) then:
a. the substitution effect always dominates the income effect. b. the income effect always dominates the substitution effect. c. the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. d. the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.