The relationship between changes in income and purchase of a good indicates
a. whether the good is a luxury or necessity.
b. whether the good is normal or inferior.
c. whether the good is a complement or substitute.
d. Both a and b.
d
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Consider the following data: Price of A Quantity Demanded of A $5 6 $4 10 The absolute value of the price elasticity of demand for product A is
A) 0.44. B) 1.80. C) 0.56. D) 2.25.
Irving R. Associates is granted a patent for a new product for which there are no close substitutes. Which of the following must be true at the profit-maximizing quantity?
a. Price is equal to marginal cost. b. Average revenue is equal to marginal cost. c. Marginal revenue is positive. d. Marginal revenue is less than marginal cost. e. Price is greater than average revenue.
If strong monetary policy stimulus is used to combat a recessionary gap, what will happen?
a. a rapid movement toward lower unemployment and higher inflation b. a rapid movement toward lower unemployment and lower inflation c. a slow movement toward lower unemployment and higher inflation d. a slow movement toward lower unemployment and lower inflation
A good is considered nonrival-in-consumption if
a. many individuals can share in the consumption of the same unit of the good. b. the consumption of the good by one individual lowers the amount available for others. c. even nonpaying customers can receive the full benefit from the good. d. its production is financed through tax revenue rather than market prices.