For which of the following workers would the substitution effect be more likely to outweigh the income effect of an increase in wage?
A. Air traffic controller
B. Marketing manager
C. Waitress
D. Dentist
Answer: C
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Suppose Lisa spends all of her money on books and bagels, and a bagel is an inferior good for her. When the price of coffee increases, the
A) consumption of coffee will fall. B) consumption of coffee will rise. C) consumption of coffee will not change. D) Not enough information.
Which of the following best explains the source of consumer surplus for a particular product?
a. Many consumers pay prices that are greater than the equilibrium price of the product. b. Many consumers would be willing to pay more than the market price for the product. c. Many consumers think the market price of the product is greater than its cost. d. Many consumers think the demand for the product is elastic.
Why is a recession's end sometimes not announced for long periods after the recession ends?
a. Because economic data is seldom accurate. b. Because seasonal fluctuations and random disturbances make the economy difficult to track the differences between a temporary drop and a beginning of a downturn. c. Because people don't change their behavior even when the economy is in a downturn. d. No one knows why economists have a difficult time identifying the beginning and end of an economic downturn.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary