If incomes are rising, in the market for a normal good,
a. its price will rise and the quantity exchanged will rise.
b. its price will rise and the quantity exchanged will fall.
c. its price will fall and the quantity exchanged will rise.
d. its price will fall and the quantity exchanged will fall.
a
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A cold winter will increase the quantity of heating fuel demanded at every price.
Answer the following statement true (T) or false (F)
Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good. All of the following will result from the tax except
A) an increase in demand for the good. B) a decrease in the equilibrium quantity produced and consumed. C) an increase in the equilibrium market price. D) a decrease in market supply of the good.
If the average cost of a product is $10 per unit and the price is $5, the firm is losing money.
Answer the following statement true (T) or false (F)
For a firm to be economically efficient from society's point of view, it should produce to the point at which
A) marginal cost equals marginal revenue. B) marginal cost equals average total cost. C) marginal cost equals price. D) average total cost equals price.