If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals ________ and the good is ________ good
A) 1/2; a normal
B) -1/2; an inferior
C) 2; a normal
D) -2; a normal
E) -5; an inferior
B
You might also like to view...
Explain the "shoe-leather" costs of inflation
What will be an ideal response?
Compared to corporations, businesses that are proprietorships
A) are far more numerous. B) account for a larger percentage of the economy's total revenue each year. C) can raise capital more cheaply. D) All of the above are correct answers.
Suppose there are no borrowing constraints but the individual wishes to leave a bequest of $120,000 (after adjusting for inflation) to heirs. Then annual consumption should be
Consider an individual who enters adulthood and the labor force at age 18, expects to work 5 years at a real income of $10,000 per year, anticipates earning a real income of $40,000 per year from age 23 to 63, expects to retire with a $10,000 annual pension, and live until age 78. Suppose the interest rate is zero, and the individual seeks perfectly smooth consumption across his adult lifetime. a) $12,000 b) $16,000 c) $20,000 d) $24,000 e) $28,000
In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?
A. The production possibilities curves for these countries would have shifted outward. B. The production possibilities curves for these countries would have shifted inward. C. The production possibilities curves for these countries would have been unaffected. D. This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.