Exhibit 3-2                  Good X

question 194

Multiple Choice

Exhibit 3-2

                 Good X
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Refer to Exhibit 3-2. Suppose equilibrium is at point C. Something then changes and equilibrium becomes point B. Which of the following is consistent with the change in equilibrium from point C to B (assuming that good X is a normal good) ?

• A)There was an increase in resource prices and income stayed constant.
• B)There was a decrease in resource prices and income stayed constant.
• C)There was an increase in resource prices and income decreased.
• D)There was a decrease in resource prices and income increased.

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Definitions:

Profit-Maximizing

The technique a firm uses to ascertain the optimal pricing and production levels for achieving maximum profit.

Short Run

A period in which at least one input (like plant and equipment) is fixed and cannot be changed by a business.

Long Run

A period of time in which all factors of production and costs are variable, allowing all inputs to be adjusted.