Calculate the APS.
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Refer to Budget Lines. If the consumer purchased basket D last year and basket A this year,
a. They are definitely better off this year than last year.
b. They were definitely better off last year than this year.
c. They could be equally well off in the two years.
d. It is impossible to tell wether they are better or worse off, even if we knew the person's preferences.
Real income equals a household's income
A) in terms of the quantity of goods the household can buy. B) multiplied by the prices of the goods it buys. C) divided by the prices of the goods it buys. D) multiplied by the relative prices of the goods it buys.
Which tool do economists use to determine the effect of an economic event on equilibrium price and quantity?
a. equilibrium price b. the four-step process c. demand schedule d. supply schedule
The change in people's purchasing power that occurs when the price of one good that they purchase changes is the
A) law of diminishing marginal utility. B) real-income effect. C) substitution effect. D) price income effect.