The principle of substitution states thatA. The costs of two factors of production are equal.B. Profit maximization is maintained while choosingeither factor of production.C. The firm chooses more of the less expensivefactor of production.D. The firm chooses more of the more expensivefactor of production. Source: CMA 0689 1-24When making a decision to increase the roboticautomation equipment in an existing facility, a firm takesall of the following into consideration exceptA. Economies of scale.B. Opportunity cost.C. Technological efficiency.D. The initial cost of the current facility. Source: CMA 0689 1-26A decrease in the price of a complementary good willA. Shift the demand curve of the joint commodity tothe left.B. Increase the price paid for a substitute good.C. Shift the supply curve of the joint commodity tothe left.D. Shift the demand curve of the joint commodity tothe right. Source: CMA 0689 1-29If a product is part of the consumers' basket of goods,and the Consumer Price Index increased 7% for the year while the price of this normal good increased 3%, thenA. The supply curve will shift to the left.B. Neither the demand curve nor the supply curvewill be affected.C. The demand curve will shift to the right.D. The demand curve will shift to the left. Source: CMA 1289 1-4If the elasticity of demand for a normal good is estimatedto be 1.5, a 10% reduction in its price would causeA. Total revenue to fall by 10%.B. Total revenue to fall by 15%.C. Quantity demanded to rise by 15%.D. Demand to decrease by 10%. Source: CMA 1289 1-11An industry that is oligopolistic would be bestcharacterized byA. One firm selling a product with no closesubstitutes.B. The absence of the profit-maximizing goal.C. Significant barriers to entry.D. Horizontal or flat demand curves for the output of individual firms. Source: CMA 0690 1-19If a normal good competes with three similar goods, andall four goods give the consumer equal utils of satisfaction, the demand for the normal goodA. Is relatively elastic.B. Is perfectly elastic.C. Responds as an inferior good.D. Is perfectly inelastic. Source: CMA 0690 1-20If oil producers and retailers were to increase the price of gasoline for cars during the summer season by $.05 per gallon, these suppliers anticipate that the demand for gasolineA. Is relatively elastic.B. Is relatively inelastic.C. Responds as an inferior good.D. Is perfectly inelastic. Source: CMA 0690 1-21The Waymand family typically ate hamburger as a staplein their diet. In the last few years, the family's incomehasdoubled, and they have now replaced hamburger withsteak as a staple in their diet. This is an example inwhichthe demand for hamburger A. Is relatively elastic.B. Is perfectly elastic.C. Is relatively inelastic.D. Responds as an inferior good. Source: CMA 0690 1-22Utility companies can ordinarily price their product, agood that establishes a comfortable life-style (i.e.,electricity, gas for home heating), based on theassumption that the demandA. Is relatively elastic.B. Is perfectly elastic.C. Is relatively inelastic.