Marginal utility theory predicts that an increase in income means that the consumption of
A) all goods will increase.
B) normal goods will increase and consumption of inferior goods will decrease.
C) inferior goods will increase and consumption of normal goods will decrease.
D) None of the above answers is correct.
B
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What are some distinctions between light industry and heavy industry? Why do economies tend to start with light, and move to heavy industries?
What will be an ideal response?
Which of the following is not an advantage of user charges?
a. User charges help ration consumption of the taxed good. b. User charges are equitable from the standpoint of the benefit principle of taxation. c. User charges reveal consumer preferences for the taxed good. d. User chargers are easy to apply in cases where the benefits are spread diffusely.
To sell more units, a monopolist
A) simply moves across its horizontal demand curve to a larger quantity. B) moves down its demand curve to a lower price that will increase quantity demand. C) can continue to receive the same price it always has as long as it has its customers' goodwill. D) must be willing to lower the barriers to entry that have protected it.
If the price of Pepsi-Cola increases from 40 cents to 50 cents per bottle and the quantity demanded decreases from 100 bottles to 50 bottles, then according to the averaging equation, the value of price elasticity of demand for Pepsi-Cola is
a. 0.5 b. 0.25 c. 1 d. 3 e. 2