Consumers' income declines and, as a result, the demand for margarine increases. Is margarine a normal or an inferior good? Explain
What will be an ideal response?
Margarine is an inferior good. An inferior good is one for which demand increases as income decreases, which describes the situation outlined for margarine in the question.
You might also like to view...
Rent controls and the minimum wage are both examples of price ceilings
Indicate whether the statement is true or false
Human capital is the amount of
A. capital available to workforce. B. skill embodied in the workforce. C. output the labor force can produce. D. healthy work force in the total population.
Exhibit 11-12 A monopsonist
In Exhibit 11-12, suppose this labor market is unionized by a powerful union which forces a wage of $35 upon the industry. The firm would respond by hiring ____ workers and paying a wage of ____.
A. 40; $35 B. 60; $30 C. 70; $27 D. 60; $35
In order to maximize net benefits, firms should produce where:
A. profits are zero. B. total benefits equal total costs. C. marginal benefits equal marginal costs. D. marginal cost is minimized.