The consumption schedule directly relates:
A. consumption to the level of disposable income.
B. saving to the level of disposable income.
C. disposable income to domestic income.
D. consumption to saving.
A. consumption to the level of disposable income.
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Cigarettes are highly addictive and therefore have a very low elasticity of demand. A $2.00 increase in the national sales tax on cigarettes would likely cause the price paid by buyers of cigarettes to
A) increase by more than $1.00 but less than $2.00. B) increase by $2.00. C) increase by more than $2.00. D) increase by less than $1.00. E) remain unchanged.
If a substitute good is easy to find, then demand for a good is
A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic. E) Substitutes don't have any effect on elasticity.
Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
A) The demand for wheat would decrease and the equilibrium price of wheat would decrease. B) The demand for wheat would increase because consumers could afford to buy more wheat and corn. C) The demand for wheat would decrease and the equilibrium price of wheat would increase. D) The supply of wheat would increase and the equilibrium price of wheat would decrease.
Suppose both the equilibrium price and quantity rise for a particular product. Which of the following best explains this situation?
a. Supply and demand simultaneously increased and the shift in supply was greater than the shift in demand. b. Supply and demand simultaneously increased and the shift in supply was less than the shift in demand. c. Supply and demand simultaneously decreased and the shift in supply was greater than the shift in demand. d. Supply and demand simultaneously decreased and the shift in supply was less than the shift in demand.