The substitution effect suggests that when consumers judge product quality by price, they will substitute high-priced products for low-priced products.

Kawamura Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During December, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the planning budget for December would be closest to:

A) $10,156
B) $9,890
C) $7,309
D) $7,184

If a bank has negative excess reserves,

A) it is bankrupt.
B) its required reserves are greater than its actual reserves.
C) it must stop making loans.
D) it must raise the interest rates it is charging borrowers.

The trends for small businesses in the United States from 1980 to 2003 show the greatest increase in the number of ______.

A) partnerships
B) public corporations
C) very small businesses
D) private corporations