Steak and Chicken Are Substitutes

question 59

Multiple Choice

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

• A)increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken.
• B)increase consumer surplus in the market for steak and increase producer surplus in the market for chicken.
• C)decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.
• D)decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.

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Definitions:

Effective Interest Rate

The rate at which invested capital grows over a period, taking into consideration the effect of compounding.

Amortizing

The process of gradually writing off the initial cost of an asset over a period, especially in the context of loan repayments or in spreading the cost of intangible assets.

Preferred Method

A favored or recommended approach or technique selected among various alternatives for its effectiveness or efficiency.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.