For which of the following goods is the income elasticity of demand likely highest?
a. natural gas
b. doctor's visits
c. hamburgers
d. boats
d
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When the price of oranges increases from $4 to $6 per bag, the quantity demanded of oranges decreases from 800 bags to 700 bags. The price elasticity of demand over this price range is equal to
A) 3. B) 3/7 or 0.4286. C) 1/3 or 0.3333. D) 1/4 or 0.25.
Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that
A) Honduras has a lower opportunity cost of producing bananas relative to Brazil. B) Brazil has an absolute disadvantage in producing bananas relative to Honduras. C) Labor costs are higher for banana producers in Brazil than in Honduras. D) Honduras also has an absolute advantage in producing bananas relative to Brazil.
Refer to Figure 28-2. Suppose the economy is at point A in the figure above. Which of the following is true?
A) Actual inflation is 1%. B) The economy will move from A to B. C) The expected rate of inflation is 5.5%. D) The current unemployment rate is 3.8%. E) The current unemployment rate is equal to the natural rate of unemployment.
Refer to Figure 9.3. If the government establishes a price ceiling of $1.00, producer surplus will
A) fall by $150. B) fall by $300. C) remain the same. D) rise by $150. E) rise by $300.