If the Price of Butter Increases, the Demand for Margarine

question 74

Multiple Choice

If the price of butter increases, the demand for margarine

• A) will be unchanged.
• B) will shift outward.
• C) will shift inward.
• D) will kink into an S-curve.

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Definitions:

Perfect Competitor

A theoretical market structure where many firms sell identical products, entry and exit are easy, and no single buyer or seller can influence the market price.

Imperfect Competitor

A market participant that cannot dictate the market prices but can influence them through its product or service differentiation.

Wage Rate

The standard amount of compensation given to employees for their labor, typically expressed as an hourly, daily, or piece rate.

Perfect Competitor

A market situation where many small firms produce identical products, allowing them free entry and exit from the market, leading to price takers.