If a good is a luxury, the income elasticity of demand must be
A. positive and greater than 1.
B. zero.
C. negative.
D. merely positive (not necessarily greater than 1).
Answer: A
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The expenditure multiplier is typically
A) equal to 1. B) greater than 1. C) negative. D) less than 1 but greater than 0. E) greater than 10.
Figure 7-6
Which of the lines in Figure 7-6 represents a typical average fixed cost curve?
A. 1 B. 2 C. 3 D. 4
A movement along the MP curve ________
A) implies an automatic adjustment of the interest rate B) implies an autonomous adjustment to the interest rate C) implies an autonomous adjustment of aggregate demand D) all of the above E) none of the above
Which of the following firms have no market power?
A. clothing companies B. fast food chains such as McDonald's C. theme parks D. gold panners during the gold rush