The substitution effect of a price change refers to
A) the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.
B) the shift in the demand curve due to a change in purchasing power brought about by the price change.
C) the movement along the demand curve due to a change in purchasing power brought about by the price change.
D) the shift of a demand curve when the price of a substitute good changes.
Question 2
If the marginal cost for Big Ed's Used Car Emporium to advertise one additional day each week on a local TV station is 1,500, then Big Ed's should advertize that additional day
A) as long as the weekly marginal cost does not rise.
B) only if the marginal benefit the company receives each week is greater than 1,500 plus an acceptable profit margin.
C) as long as the marginal benefit the company receives each week is just equal to or greater than 1,500.
D) until the marginal benefit the company receives reaches zero.
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