Suppose the demand for widgets is given by QD = 100 - 5p - pd + 2Y, where Y is average consumer income, p is the price of lemons, and pd is the price of doodads. According to this equation, widgets are an inferior good
Indicate whether the statement is true or false
False . As income increases, because of the positive coefficient (+2 ) for income, demand will increase. This indicates widgets are normal.
You might also like to view...
Along a straight-line demand curve, as the price falls the
A) demand becomes more elastic. B) demand becomes less elastic. C) elasticity of demand is constant. D) demand is always unitary elastic.
In a machine shop, the marginal physical product of an additional unit of labor is 4 units of output, while the marginal physical product of an additional piece of machinery is 2, under what conditions would the firm increase labor usage?
A. It would increase labor usage if the wage rate is more than twice the unit price of a piece of machinery. B. It would increase labor usage if the wage rate is less than twice the unit price of a piece of machinery. C. It would increase labor usage as long as the wage rate is less than the unit price of a piece of machinery. D. It would not increase labor usage under any scenario.
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then according to the averaging equation, the value of price elasticity of demand in absolute terms is:
a. 0.33. b. 2.33. c. 0.25. d. 3. e. 0.66.
Which of the following concepts is not included in the study of macroeconomics?
a. The unemployment level b. The inflation rate c. The real income d. The profit-maximizing condition e. The role of government