Assume That Goods X and Y Are Substitutes and Are

question 20

Multiple Choice

Assume that goods X and Y are substitutes and are produced in perfectly competitive markets.All else constant,in the short run,a decrease in the supply of good X would cause:

• A)an increase in the demand for good Y.
• B)a decrease in the demand for good Y.
• C)an increase in the supply of good Y.
• D)a decrease in supply of good Y.

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Definitions:

Break Even

The point at which total costs and total revenues are equal, resulting in no profit or loss for a business.

Fixed Costs

Expenses that remain constant regardless of the amount of goods produced or sold, including items like lease payments, wages, and insurance costs.

Marginal Cost

The increase in cost resulting from the production of one additional unit of a product or service.

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, and insurance premiums.