If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?
What will be an ideal response?
The income elasticity equals 1.22. Because the income elasticity of demand is positive, the good is a normal good.
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Most likely, the stock market crash in 1929 was triggered by ________
A) an autonomous tightening of monetary policy B) an unexpected increase in tax rates C) the rise of fascist political parties in Europe D) a decline in consumer spending
2A fixed cost is
A. a cost the firm must pay even if output is zero. B. a cost which increases in a fixed proportion as output increases. C. the cost of any input with a fixed price per unit. D. both b and c E. all of the above
Some economists argue that monopolistically competitive markets are inefficient because:
A. the firms earn economic profits in the long run. B. the firms' marginal costs and marginal revenues are not always equal. C. firms do not produce the output rate that would minimize their average total cost. D. barriers to entry are high.
Which of the following statements about price stickiness or flexibility is true?
A. Prices of many raw materials are less flexible than the prices of final goods and services B. Prices of many raw materials are much more flexible than the prices of final goods and services C. Prices of many raw materials are about as flexible as the prices of final goods and services D. Prices of many raw materials are only slightly more flexible than the prices of final goods and services