How are normal goods and inferior goods similar? How are they different?
What will be an ideal response?
Both normal goods and inferior goods work in conjunction with income to affect demand. However, they do so in different ways. If people’s income increases (decreases) then their demand for normal goods will also increase (decrease). However, if people’s income increases (decreases) then their demand for inferior goods will decrease (increase). The reasons for this are that normal goods are often more desirable and more expensive than inferior goods. For example, staying at a luxury hotel (normal good) is more desirable and expensive than staying in an economy hotel (inferior good). Therefore, if a person has enough money, he or she would prefer purchasing the normal good.
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An advertisement campaign that successfully convinces consumers to buy union-made products has the direct effect of shifting the
A) demand curve for union labor rightward. B) demand curve for union labor leftward. C) supply curve of union labor rightward. D) supply curve of union labor leftward.
In the schematic theory of economic policy, the demand for money is considered
A) a policy instrument. B) an exogenous nonpolicy variable. C) a structural relation. D) a target variable. E) an irrelevant side effect.
Which of the following games is NOT analyzed with game theory?
A) State Lottery B) Poker C) Car Chases D) Auctions
The best way to ensure that the sales agents are working in the firm's best interests is to
a. Tell the agent what he should be doing b. Provide the agent an incentive to work in your best interest c. Force the agent to work in your best interest d. Fire the agent