Use the Following to Answer Question

question 32

Multiple Choice

Use the following to answer question:
-(Figure: Harold's Indifference Curves) Use Figure Harold's Indifference Curves.If the price of cheese is $2 per pound and Harold has $10 to spend on bread and cheese,Harold _____ his consumption of cheese as the price of bread rises from $1 per loaf to $2 per loaf,indicating that bread and cheese are _____.

• A)increases;substitutes
• B)increases;complements
• C)decreases;substitutes
• D)decreases;complements

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Definitions:

Market Power

The ability of a company or entity to control prices or exclude competition within a particular market.

Price-Fixing Agreement

An arrangement between competitors to set prices at a certain level, rather than allowing them to be determined by natural market forces, often considered illegal.

Per Se Violation

An act that is considered illegal in itself, without needing to prove harm or malicious intent, usually in antitrust law.

Foreign Firm

A business entity that is incorporated or based in a country other than where it is conducting business.