Marginal utility theory predicts that
A) when the price of a good rises, the quantity demanded of that good decreases.
B) if the price of one good rises, the demand for a substitute good increases.
C) if income increases, the demand for a normal good increases.
D) All of the above answers are correct because all are predictions of marginal utility theory.
Question 2
The labor supply curve has a
A) positive slope always.
B) negative slope if the income effect is greater than the substitution effect.
C) positive slope if the income effect is greater than the substitution effect.
D) negative slope always.
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