Which of the following goods would be likely to be bought in the same quantity even if it doubled in price?
a) shoes
b) telephones
c) pencils
d) computers
Ans: c) pencils
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Explain the following statement: "People hate taxes primarily because of income effects while economists hate taxes primarily because of substitution effects."
What will be an ideal response?
What is ‘government failure'? How would you draw the line between public and private activity?
What will be an ideal response?
We know that products G and H are related goods, because when the price of G increases,
A) the demand curve for H will shift to the right, because G and H are complementary goods. B) the quantity of H demanded will shift along its demand curve, because G and H are complementary goods. C) the demand curve for H will shift to the left, because G and H are complementary goods. D) the demand curve for H will remain unchanged because G and H are substitute goods.
The Security Market line (SML) shows how the average expected rates of return on assets vary with:
A. Stock price B. Dividend payment C. Risk level D. Time preference