Which of the Following Would Not Cause Market Demand for a Normal

question 227

Multiple Choice

Which of the following would not cause market demand for a normal good to decline?

• A) An increase in the price of a substitute.
• B) An increase in the price of a complement.
• C) A decline in consumer income.
• D) Consumer expectations that the good will go on sale in the near future.
• E) An announcement by the Surgeon General that the product contributes to premature death.

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Definitions:

Total Cost

The total expense of manufacturing, comprising both constant and fluctuating costs.

Market Price

The cost at which a product or service is made available in the market, dictated by the forces of supply and demand.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profit beyond the normal return on investment.

Marginal Decision Rule

A principle stating that an action should be taken if, and only if, the marginal benefits are greater than or equal to the marginal costs.