The income elasticity of demand
A) is positive only.
B) is negative only.
C) must lie between -1 and +1.
D) can be positive, negative, or zero.
Answer: D
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Using the cash balance version of the quantity theory with k = .2, an increase in the money supply of $100 billion leads to an increase in GDP of
A) $500 billion. B) $100 billion. C) $50 billion. D) $20 billion.
The slope of the labor-leisure budget constraint represents the tradeoff between leisure and income
a. True b. False Indicate whether the statement is true or false
The Fed engages in an expansionary money policy by ______ the money supply and ______ the interest rate.
a. decreasing; decreasing b. decreasing; increasing c. increasing; decreasing d. increasing; increasing
Suppose your firm is operating in a perfectly competitive market, and that the minimum average variable cost of producing your good is $30. If the price of the good is $32, your firm should:
A. not produce anything since the price is above the minimum of average variable cost. B. not consider price when determining the amount to sell. C. supply the amount of the good where the marginal cost of production is equal to $32. D. supply the amount of the good where the marginal cost of production is $30.