Which of the following is true concerning the income effect of a decrease in price?
A) It will lead to an increase in consumption only for a normal good.
B) It always will lead to an increase in consumption.
C) It will lead to an increase in consumption only for an inferior good.
D) It will lead to an increase in consumption only for a Giffen good.
A
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Use the figure below to answer the following question.
An increase in supply would best be reflected by a change from
A. point 2 to point 5. B. point 1 to point 3. C. point 1 to point 2. D. point 3 to point 4.
The individual labor supply curve is positively sloped in the short run.
Answer the following statement true (T) or false (F)
Which one of the following would cause an increase in the supply of planes?
A. an improvement in the technology used to produce planes B. an increase in the price of planes C. an increase in taxes applied to plane producers D. a decrease in the demand for planes
If the supply and demand curves below represent the market supply and demand for a purely competitive industry, then the demand curve that an individual firm in the industry faces:
A. Is identical to the market demand
B. Is equal to the marginal-revenue curve which is a flat line at P0
C. Is more elastic than the market demand but has a marginal-revenue curve lying below it
D. Has the same slope as the market demand, but at P0 its quantity demanded is only a fraction of Q0