Median household income is $50,000 per year. The typical household spends about $125 per year on milk, which has an income elasticity of about 0.07. From this information, we can conclude that
A) milk is a luxury.
B) milk is a Giffen good.
C) the income effect from a change in the price of milk is very large.
D) the income effect from a change in the price of milk is very small.
D
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Refer to the scenario above. The sum of the firms' payoffs is maximum when ________
A) both the firms choose Strategy X B) both the firms choose Strategy Y C) Firm A chooses Strategy X, and Firm B chooses Strategy Y D) Firm A chooses Strategy Y, and Firm B chooses Strategy X
Why do workers exert more effort when they are paid higher salaries?
What will be an ideal response?
Workers in the 1800s building railroads by hand was an example of a(n) ____ intensive form of production
a. capital b. labor c. entrepreneurial d. working
Lisa Beth loves bananas and derives 10 utils of total utility eating the first one. When she consumes a second banana, her total utility increases to 15 utils. Eating the third raises her total utility to 18 utils. Economists reading her likes and dislikes conclude that
a. because the total utility of the first is 10, she is better off consuming that one and no more b. because the marginal utility of the third banana is 18/3 = 6 utils, she would be better off adding that third to consumption because 6 utils is still better than zero c. the marginal utility of the second banana is 8 utils, which means she should not eat it d. the marginal utility of the first banana is zero, even though total utility is 10 utils because at zero bananas, total utility is zero e. the marginal utility of the third banana is 3 utils, which conforms to the law of diminishing marginal utility