If a Decrease in Income Leads to an Increase in the Demand

question 10

Multiple Choice

If a decrease in income leads to an increase in the demand for sardines, then sardines are

• A)an inferior good.
• B)a neutral good.
• C)a necessity.
• D)a normal good.

Understand the dynamics of short-run and long-run equilibrium in monopolistic competition, including the zero-profit condition.

Explain how the entry and exit of firms affect the market structure and individual firms' economic profits in monopolistic competition.

Analyze the impact of changes in fixed costs and market demand on firms' output, price, and economic profits.

Discuss how the marginal decision rule guides firms in adjusting production to maximize profits.

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Definitions:

Mode

The value that appears most frequently in a dataset.

Sample Mean

The average value of a sample set of numbers, calculated by adding all the observations and dividing by the number of observations.

Observations

Data points or values recorded during an experiment or study.

Sample

A subset of individuals, items, or data from a larger population used to estimate characteristics of the whole population.