If the income elasticity of potatoes is -0.7, then the income effect caused by a price decrease of potatoes
A) tends to increase the consumption of potatoes.
B) tends to decrease the consumption of potatoes.
C) is less than the substitution effect.
D) None of the above.
B
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The most important determinant of the price elasticity of demand for a good is
A) the share of the good in the consumer's budget. B) whether the good is a necessity or a luxury. C) the definition of the market for a good. D) the availability of substitutes for the good.
In the Keynesian model, which of the following will cause a reduction in interest rates?
A) An increase in money demand B) An increase in money supply C) An increase in saving D) A decline in saving
An increase in the quantity of capital shifts the ... curve ... and the ... curve ...
What will be an ideal response?
If a small percentage change in price causes a larger percentage change in the quantity demanded, the good has:
A. an elastic demand. B. an inelastic demand. C. a high magnitude of response. D. a low magnitude of response.