Consumers Eat Salsa with Taco Chips

question 84

Multiple Choice

Consumers eat salsa with taco chips.The price of salsa rises.How does the increase in the price of salsa affect the demand for taco chips?

• A) It decreases the demand for taco chips.
• B) It increases the demand for taco chips.
• C) It has no effect on the demand for taco chips.
• D) It will decrease the demand for taco chips only if taco chips are a normal good.
• E) It could increase, decrease, or have no effect on the demand for taco chips, but more information is needed to determine the impact.

---

Definitions:

Market Price

The existing price point for transactions involving an asset or service in the market.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit, leading to price taking behavior.

Marginal Revenue

The increase in revenue that results from selling one more unit of a product.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, calculated by equating marginal revenue and marginal cost.