If a 5 percent increase in income leads to a 10 percent increase in quantity demanded for airline travel, then airline travel is
A) an inferior good. B) a necessity.
C) a luxury. D) a substitute for another good.
C
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If it is not possible to increase the output of one good without decreasing the output of the other, when there are only two goods, then
A. this situation would describe a point on a production possibilities frontier for the producer. B. the outcome can be described as efficient. C. there is no unemployment of resources. D. All of these outcomes are correct.
In the above figure, the profit-maximizing rate of production for the perfectly competitive firm is
A) 5. B) 10. C) 13. D) none of the above.
Conventional economic theory suggests that in the ultimatum game, the player proposing a split of $50 will propose that she get $49 and that the other player get $1 . By the same reasoning, if the amount to be split is $1000, the player proposing the split will propose that she gets
a. $500 and that the other player gets $500. b. $998 and that the other player gets $2. c. $999 and that the other player gets $1. d. $1000 and that the other player gets nothing.
If the economy is operating on the long-run aggregate supply curve, then expansionary fiscal policy will
A) generate higher prices in the short run, but will induce aggregate supply to increase in the long run. B) generate an increase in real GDP and higher prices in the short run, but then real GDP will decrease to its long-run level, and the price level will increase some more. C) generate an increase in real GDP without higher prices in the short run, but then real GDP will return to its long-run level, and the price level will increase. D) generate an increase in real GDP and higher prices in both the short run and the long run.