Pepsi and Pizza Are Normal Goods

question 284

Multiple Choice

Pepsi and pizza are normal goods. When the price of pizza rises, the substitution effect causes Pepsi to be relatively

• A)more expensive, so the consumer buys more Pepsi.
• B)more expensive, so the consumer buys less Pepsi.
• C)less expensive, so the consumer buys more Pepsi.
• D)less expensive, so the consumer buys less Pepsi.

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Definitions:

Dominant Strategy

A strategy in a game theory scenario that is best for a player, no matter what strategies other players use.

Annual Profits

The net income a company generates in one fiscal year, derived from its revenue minus expenses, taxes, and costs.

Payoffs

The outcomes or returns from a particular action or decision, often used in the context of game theory and economic models.

Sherman Antitrust Act

Is a landmark federal statute in the United States that prohibits monopolistic business practices and promotes competition.