A normal good is a good for which demand
A) decreases when income increases.
B) increases when income increases.
C) decreases when population increases.
D) increases when population increases.
B
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What are the effects of an increase in labor productivity on potential GDP, the quantity of labor, the real wage rate, and potential GDP per hour of labor?
What will be an ideal response?
In the country of Bora Bora, consumers buy large quantities of alcohol, tobacco, and coffee. Last year, the prices of these goods each increased by 10 percent. The quantities demanded for these goods fell by 10, 3, and 8 percent, respectively. If the government is thinking about imposing a unit tax on one of these goods, which good should they choose to tax to raise the most tax revenue, and why?
a. Alcohol; because the price elasticity is highest. b. Tobacco; because the price elasticity is lowest. c. Coffee; because it will have the lowest tax elasticity. d. Tobacco; because it will have the highest tax elasticity. e. Alcohol; because the burden of taxation would be more even.
The decision about whether to change prices frequently or infrequently is an application of the:
A. cost-benefit principle. B. scarcity principle. C. principle of increasing opportunity cost. D. principle of comparative advantage.
Which of the following is NOT a characteristic or focus of microeconomics?
A) individual consumers. B) analysis of aggregate economic variables C) firm behavior D) individual markets