For a normal good, the
a. income effect is greater than 1.0
b. income effect is negative
c. substitution effect is zero
d. income effect and the substitution effect work in the same direction
e. demand curve is horizontal
D
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Which of the following can prevent markets from reaching efficiency? I. decreasing marginal benefit II. taxes III. quantity regulations that limit the quantity that may be produced
A) I and II B) I and III C) II and III D) I, II and III
Which of the following statements about the perfect competitor is INCORRECT?
A) The perfectly competitive firm is always a price taker. B) The perfect competitor sells a homogeneous commodity. C) If an individual firm raises price, it will lose business. D) The products made by a perfectly competitive firm have no close substitutes.
Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States. If the exchange rate is .80 euros per dollar, what is the real exchange rate?
Exhibit 6A-2 Consumer Equilibrium
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Given the budget lines and indifference curves shown in Exhibit 6A-2, point D yields:
A. the same total utility as point A, but requires a larger budget. B. the same total utility as point A, and point E for the same budget. C. more total utility than point A, but requires a larger budget. D. the same total utility as point B, but requires a smaller budget.