If an individual's income rises 10 percent and his clothing purchases increase 15 percent in response, the income elasticity for clothing by the individual is
A. 0.8.
B. 1.5.
C. -1.5.
D. -0.8.
Answer: B
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Indicate whether the statement is true or false
Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then:
a. aggregate demand will decrease. b. aggregate demand will increase. c. long-run aggregate supply will increase. d. long-run aggregate supply will decrease.
Which of the following statements is correct?
A) The Social Security program funnels transfers from retired individuals to the youngest children of low-income families. B) Social Security is an entitlement which is available to everyone, including those who have not contributed to the fund during their active work years. C) Social Security benefits are received by people who had contributed to the fund during their active work years. D) As a public transfer payment, Social Security benefit is available only to the poor.
Refer to the figure below, which shows marginal benefits (MB) and marginal cost (MC) of activity A:
If the decision maker is choosing 200 units of activity A,
A. this level maximizes net benefits. B. the activity could be increased by one unit and net benefits will increase by $10. C. the activity could be increased by one unit and net benefits will increase by $25. D. the activity could be reduced by one unit and net benefits will increase by $10. E. the activity could be reduced by one unit and net benefits will increase by $15.