Assume that Tonya consumes only two products, pizza and potato chips, out of a given budget. Both are normal goods for Tonya. If the price of pizza decreases, then Tonya's consumption of pizza will:
A. Decrease due to the income effect
B. Decrease due to the substitution effect
C. Increase due to the income effect
D. Increase due to the law of diminishing marginal utility
C. Increase due to the income effect
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________ policy involves decisions about government spending and taxation
A) Monetary B) Fiscal C) Financial D) Systemic
Which of the following could lead to an inward shift of the production possibilities frontier?
a. an increase in the cost of one good b. an increase in the utilization of resources c. a rise in the level of technology d. a law is passed whereby a mandatory retirement age of 60 is imposed e. a decrease in the utilization of resources
Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e2 and a reservation wage of $1,500 so that her compensation package is W = 1,500 + 0.2 Q, where the CEO sets the incentive at 0.2 and Q = 200 e. Here effort is known only by the employee. There is a random shock to output each period whose mean is zero. (a) What is the optimal effort for Mary Sue Nelson? (b) On average, what total wage or salary will she earn each month? (c) On average, what is the output of sales contracts that she makes? (d) On average, what kind of profit will the CEO earn off of Nelson's work?
What will be an ideal response?
Which of the following is vertical?
a. both the long-run Phillips curve and the long-run aggregate supply curve b. neither the long-run Phillips curve nor the long-run aggregate supply curve c. the long-run Phillips curve, but not the long-run aggregate supply curve d. the long-run Phillips curve, but not the long-run aggregate supply curve