Dave consumes two normal goods, X and Y, and is currently at an optimum. If the price of good X falls, we can predict with certainty that
a. Dave will consume more of both goods because his real income has risen.
b. the substitution effect will be positive for good X and negative for good Y.
c. Dave may consume more or less of good X, but he will consume less of good Y.
d. the substitution effect will offset the income effect for good X.
b
You might also like to view...
Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $10, we would expect that
A) price will increase until quantity demanded equals quantity supplied. B) demand will decrease until quantity demanded equals quantity supplied. C) supply will increase until quantity demanded equals quantity supplied. D) there will be no change in the price since the market is in equilibrium.
State the law of diminishing marginal returns
What will be an ideal response?
If the money supply is $600, the price level is $2, and real GDP is $300, the velocity of money is _____
a. 1 b. 150 c. 300 d. 600 e. 1,200
A person who has given up searching for work is called:
a. frictionally unemployed. b. structurally unemployed. c. a discouraged worker. d. unemployed.