Gasoline is a normal good. If the price of gasoline falls, a consumer buys more gasoline because of
A) only an income effect.
B) only a substitution effect.
C) an increase in the marginal rate of substitution.
D) both an income effect and a substitution effect.
D
You might also like to view...
The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. There is no external cost
What is the marginal cost to the economy of Kaffenia of producing the four hundredth pound of coffee each day? A) $.50 per pound B) $1.00 per pound C) $2.00 per pound D) $4.00 per pound
In the 2007–2009 period, the expenditure level in the United States intersected the 45° line below potential GDP, causing
A. hyperinflation. B. a growing trade deficit. C. a government budget surplus. D. unemployment.
Mary purchases a U.S. Treasury bond; the bond is a(n):
A. asset of the U.S. government as well as an asset for Mary. B. asset for the government but a liability for Mary. C. asset for Mary but not a liability of the U.S. Government. D. liability of the U.S. government and an asset for Mary.
The marginal propensity to consume (MPC) in exhibit 10-2 equals
What will be an ideal response?