An individual derives utility from games, g (y-axis), and toy airplanes, a (x-axis), described by the utility function U(g,a) = g0.6a0.4. The price per game is $20 and the price of toy airplanes is $10. Using the slope of the income consumption curve (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200
A) Both goods are normal goods with an ICC slope of 3/4.
B) Both goods are normal goods with an ICC slope of 4/3.
C) Both goods are inferior goods with an ICC slope of -4/3.
D) Both goods are inferior goods with an ICC slope of - 3/4.
A
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If prices rise within a country, then, other things equal, the value of a unit of domestic currency will:
a. rise in both the domestic and the foreign exchange markets. b. fall in both the domestic and the foreign exchange markets. c. rise in the domestic market and fall in the foreign exchange market. d. fall in the domestic market and rise in the foreign exchange market. e. fluctuate unpredictably in both domestic and foreign exchange markets.
Price level changes have their greatest effect on consumers'
a. income. b. wealth. c. debt. d. expectations.
New Jersey raises its minimum wage while neighboring state Pennsylvania, does not. Economists compared the labor market in both states to draw conclusions about the effect of a minimum wage on employment and wages. This is an example of:
A. an economic principle. B. the economic decision rule. C. simulation economics. D. a natural experiment.
Both American Tobacco and United States Steel were found guilty of antitrust violations under the Sherman Act.
Answer the following statement true (T) or false (F)