Refer to Scenario 3

question 254

Multiple Choice

Refer to Scenario 3.2 below to answer the question(s) that follow.
SCENARIO 3.2: Lettuce and spinach are substitutes. Lettuce and tomatoes are complements. Lettuce is a normal good. During the winter, about 20% of the lettuce crop was destroyed by flooding.
-Refer to Scenario 3.2. The floods that destroyed part of the lettuce crop would have caused

• A) an increase in the demand for tomatoes.
• B) a decrease in the demand for tomatoes.
• C) an increase in the quantity of tomatoes demanded.
• D) a decrease in the quantity of tomatoes demanded.

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Definitions:

Profit-Maximizing Level

The point at which a firm achieves the highest profit possible, where marginal cost equals marginal revenue.

Marginal Cost

The growth in complete costs associated with creating another unit of a good or service.

Total Revenue

The total amount of money received by a company from the sale of its goods or services.

Market Price

The current price at which a good or service can be bought or sold in a marketplace, determined by supply and demand.