What Effect Will Higher Prices for Cars and Lower Prices

question 151

Multiple Choice

What effect will higher prices for cars and lower prices for homes have on the budget line?

• A) The budget line will shift outward.
• B) Both intercepts will change, but the slope will not change.
• C) The slope and both intercepts will change.
• D) The intercept associated with car ownership will decrease, but the intercept associated with home ownership will remain the same.

Describe the concept of excess capacity in monopolistic competition and its implications on production levels and profits.

Identify market structures based on characteristics and examples.

Recognize the strategic interdependence of firms in an oligopoly.

Understand the concept and significance of barriers to entry in determining market structures.

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Definitions:

Realisation of Profit

The process by which a profit is recognized on the books once a transaction is completed and the revenue can be reliably measured.

External Party

An individual, group, or organization outside of a company that can affect or be affected by the business's activities.

Group

A parent and its subsidiaries.

Deferred Tax Asset

An accounting term referring to a situation where a business has paid more taxes or has higher tax payments upcoming than what is currently due on the financial statements.