For what type of good do the substitution and income effects work in opposite directions?
A. Normal goods
B. Inferior goods
C. Giffen goods
D. The substitution and income effects never work in opposite directions.
B. Inferior goods
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Barking dogs cannot be considered an externality because externalities must be associated with some form of market exchange
a. True b. False Indicate whether the statement is true or false
An __________ is one in which is it not possible, through any change in the distribution of Good X or Good Y, to benefit one person without making some other person worse off.
Fill in the blank(s) with the appropriate word(s).
Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s). Recall the Application. What is the reason identified in the Application regarding why the short-run elasticity of supply of coffee is more inelastic than in the long run?
A. It takes at least 3 years for a newly planted coffee bush to yield marketable beans. B. Coffee production is capital intensive, and the farmers cannot afford the additional capital. C. Fertilizers are expensive in countries that produce coffee. D. The government controls the supply of coffee in those countries.
Economists generally believe that, relative to the true cost of living, the CPI
A. understates it by a factor of 2 (meaning that inflation is actually twice as bad as the government states). B. overstates it by a factor of 2 (meaning that inflation is really only half as bad as the government states). C. is perfectly measured. D. overstates it by a difference of about .8% (meaning that an official inflation rate of 1.8% is really only about 1%).