1. Mary buys three goods: A, B, and C. When her income rises she buys less of good B and more of goods A and C. When the price of good C rises she buys more of good A and less of good B. Which goods are normal? a. A and C b. B c. all of them d. C and B 2. The price of a good has gone down. What would be a good explanation of this? a. the cost of a key input used to produce the good has declined. b. there are now fewer firms selling the good. c. the price of a substitute good has gone up. d. there was an excess demand for the good in the market. 3.Under what circumstances is the production possibilities frontier a straight line? a. when there are constant opportunity costs of production b. the production possibilities frontier is always a straight line c. the production possibilities frontier is never a straight line d. when there are increasing opportunity costs of production
1. Mary buys three goods: A, B, and C. When her income rises she buys less of good B and more of goods A and C. When the price of good C rises she buys more of good A and less of good B. Which goods are normal?
a. A and C
b. B
c. all of them
d. C and B
2. The price of a good has gone down. What would be a good explanation of this?
a. the cost of a key input used to produce the good has declined.
b. there are now fewer firms selling the good.
c. the price of a substitute good has gone up.
d. there was an excess
3.Under what circumstances is the
a. when there are constant
b. the production possibilities frontier is always a straight line
c. the production possibilities frontier is never a straight line
d. when there are increasing opportunity costs of production
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