A normal good has a ________ income elasticity of demand and quantity demanded ________ as income rises
A) negative; increases
B) negative; decreases
C) positive; increases
D) positive; decreases
C
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Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Unemployment will decline. B) Output will increase. C) Prices will decline. D) Short-run aggregate supply will shift to the left.
Jones and Smith live in the same apartment building. Jones loves to play his opera recordings so loudly that Smith can hear them. Smith hates opera. Jones receives $100 of benefits from his music and Smith suffers $60 of damages. a
From an efficiency perspective, should Jones be allowed to play his opera CDs? b. Suppose the apartment building does not have any rules about noise. Jones and Smith can bargain at zero cost. Will they reach an agreement where Jones gives up his beloved operas? c. Now suppose the apartment building passes a rule that says residents are not allowed to play music their neighbors can hear if any of the neighbors object. As before, Jones and Smith can bargain at zero cost. Will Jones be allowed to play his music?
Ecuador's GDP per capita in 2017, based on market exchange rates, was $5,600. In that same year, Ecuador's GDP per capita based on purchasing power parity was $11,100. The difference between these two measures of GDP per capita is most likely explained by:
A. credentialism. B. Ecuador's limited capital account convertibility. C. Ecuador's dual economy. D. differences in relative prices between Ecuador and other countries.
If a consumer chooses a combination of goods that are inside of her budget line, than
A) the consumer is maximizing her satisfaction. B) the consumer is spending more than her current income. C) the consumer has a constant marginal rate of substitution for the two goods. D) the consumer is not maximizing her satisfaction.