For an inferior good,
a. the income effect is greater than the substitution effect.
b. the income effect is smaller than the substitution effect.
c. the income effect equals to the substitution effect.
d. none of the above occurs.
b. the income effect is smaller than the substitution effect.
You might also like to view...
The demand curve for a monopoly is
A) horizontal because the demand is perfectly elastic. B) downward sloping. C) vertical because the demand is perfectly inelastic. D) upward sloping. E) undefined because it is the only supplier in the market.
The marginal propensity to consume is 0.75, marginal propensity to invest is 0.3, and the marginal propensity to import is 0.2. What is the size of the multiplier?
A) 6.67 B) 5.67 C) 4.67 D) 1.67
The main point of the second theorem of welfare economics is that:
A) efficiency is more important than equity. B) efficiency may be achieved, but equity is not a feasible goal. C) any attempt to achieve an equitable outcome must occur off the contract curve. D) any equitable outcome can be achieved by reallocating the resources among the members of a society.
A monopolistically competitive market is one in which:
A. only one firm sells a product. B. all firms sell an identical product. C. many firms sell similar yet slightly different products. D. firms have no control over the price they charge for their product.