Michael Graduates from College and His Income Increases by $40,000

question 163

Multiple Choice

Michael graduates from college and his income increases by $40,000 a year. Other things held constant, he decreases the quantity of pizza he buys. For Michael, pizza is:

• A) an inferior good.
• B) a complement.
• C) a substitute.
• D) a normal good.

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Definitions:

Constant-Cost Industry

An industry where the input costs remain the same regardless of the industry's output level.

Long-Run Supply Curve

A graphical representation showing how the quantity of goods supplied by firms changes over time as all factors of production can be varied.

Decreasing-Cost Industry

An industry in which the costs of production decrease as the industry expands, often due to efficiencies gained from economies of scale.

Technologically Progressive Industry

An industry characterized by rapid and continuous technological innovation, leading to dynamic growth and evolution of its products and services.