The graph below represents the supply and demand for labor in a purely competitive market. The area 0abc represents:

Firms are encouraged by the profit motive to use inputs efficiently

a. True b. False Indicate whether the statement is true or false

Pepsi and pizza are normal goods. When the price of pizza falls, the substitution effect by itself will cause a

a. shift to a lower indifference curve so that the consumer buys less Pepsi. b. shift to a higher indifference curve so that the consumer buys more Pepsi. c. movement along the indifference curve so that the consumer buys more Pepsi. d. movement along the indifference curve so that the consumer buys less Pepsi.