To test the theory that if the price of pens rises, then pen purchases fall, an economist would
A. collect data on the price of pens and the price of pencils because the two goods are substitutes.
B. investigate whether people purchase more pens when their income rises.
C. analyze data on pen purchases linked to the price of pens, holding other factors constant.
D. ask his or her friends if they would buy fewer pens when the price rises.
Answer: C
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When the percentage change in the quantity supplied equals the percentage change in price, the supply is
A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic. E) perfectly inelastic.
Refer to Table 15-4. What is the amount of Shakti's profit?
A) $68 B) $72 C) $124 D) $192
The demand for gasoline is inelastic and the supply of gasoline is elastic. Therefore,
A) sellers bear most of the incidence of a tax on gasoline. B) buyers bear most of the incidence of a tax on gasoline. C) the government bears most of the incidence of a tax on gasoline. D) the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers. E) None of the above answers is correct.
Which of the following displays these two characteristics: nonrivalry and nonexcludability?
A) a pure private good B) a pure public good C) a club good D) a common pool resource