When Dealing with the Demand for Inputs

question 21

Multiple Choice

When dealing with the demand for inputs

• A)substitution and output effects work in opposite directions for substitutes
• B)substitution and output effects always work in the same direction
• C)substitution output effects work in opposite directions for compliments
• D)substitution output effects work in opposite directions for inferior goods

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers, resulting in a balance without excess supply or demand.

Producer Surplus

The variance between the price producers want to sell an item for and the price they end up receiving.

Equilibrium Price

The price point at which the quantity of a good or service supplied equals the quantity demanded.

Consumer Surplus

The disparity in what consumers are willing to invest in a good or service compared to what they eventually invest.