Product homogeneity is a standard assumption in the traditional theory of pure competition.

Jake plans to spend $100 on fried chicken and Pepsi. The price of a fried chicken is $5 and Pepsi is $2 per bottle. If Jake buys 10 fried chickens how many bottles of Pepsi can he buy?

A) 50 B) 10 C) 25 D) 75

Employing the government budget diagram shown in Figure 5-1 above, assume that the economy is initially in equilibrium at point A. The movement A to D represents

A) an increase in government spending and/or a decrease in taxes. B) a decrease in government spending and/or an increase in taxes. C) a decrease in government spending and a decrease in taxes. D) an increase in government spending and an increase in taxes.