An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. this prediction assumes that: a. there are many goods that are substitutes for bicycles. b. there are many goods that are complementary to bicycles. c. there are few goods that are substitutes for bicycles. d. bicycles are normal goods.

when taxes are levied on transactions, irrespective of the party they are levied on, a. the government can absorb some of the surplus, but also creates a social loss since some of the wealth creating transactions are discouraged b. the government can absorb all the producer surplus from the transactions as revenue c. the government can absorb all of the surplus (producer and consumer) d. the government can absorb all the consumer surplus from the transactions as revenue