The income effect of a price increase causes a decrease in the quantity of a normal good demanded
Indicate whether the statement is true or false
TRUE
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If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product, the firm will be able to earn economic profits in the long run
Indicate whether the statement is true or false
If disposable income increases by $500 million, and consumption increases by $400 million, then the marginal propensity to consume is
A) 1.25. B) 0.8. C) 0.6. D) 0.4.
An investor who is considering hedging by selling Treasury futures can also hedge by:
A) buying Treasury put options B) selling Treasury put options C) buying Treasury call options D) buying European Treasury options
Economists believe that people respond in a predictable way to changes in costs and benefits. The term that best describes this phenomenon is
a. opportunity cost b. scarcity c. innovation d. marginal analysis e. other things equal (or ceteris paribus)