Sam has $200 a month to spend on two normal goods-tanning sessions or rounds of golf. Tanning sessions are $20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two rounds of golf. If the price of a round of golf drops to $20, the income effect:
A. predicts Sam will increase his consumption of both golf and tanning sessions.
B. predicts Sam will double his consumption of golf.
C. predicts Sam will consume more golf and less tanning sessions.
D. predicts Sam will consume less golf and more tanning sessions.
A. predicts Sam will increase his consumption of both golf and tanning sessions.
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Increasing the income tax rate ________ the ________
A) does not change; supply of labor B) decreases; supply of labor C) increases; supply of labor D) decreases; demand for labor E) increases; demand for labor
When supply is written as Q = c + dP and P and Q are the equilibrium values for price and quantity, which of the following is the value of the price elasticity of supply, ES?
A. -c/d B. c(P/Q) C. -d/c D. d(P/Q)
Which of the lines represent the structural stagnation's assumption about trend growth?
A. 3 percent trend B. 2.25 percent trend C. Actual D. It is not represented
A decrease in individual income taxes ________ disposable income, which ________ consumption spending
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases