If the income effect counteracts the substitution effect, we know that the good in question is a(n)
a. complementary good.
b. inferior good.
c. luxury good.
d. normal good.
b
You might also like to view...
Sophie is willing to sell her soccer ball for $10. Ruby is willing to pay $20 for the soccer ball. Sophie and Ruby agree on a price of $16. The gains from trade for Sophie equals ________ and the gains from trade for Ruby equals ________.
A. $5, $5 B. $6, $4 C. $10, $20 D. $4, $6
In an economy, the number of potential workers is 60,000, the size of the labor force is 45,000, and the number of employed workers is 39,000. Calculate the unemployment rate and labor force participation rate in the country
What will be an ideal response?
An increase in income causes the demand of normal goods to _________ and the price of normal goods to
a. Increase; increase b. Increase; decrease c. Decrease; increase d. Decrease, decrease
In the long run when a perfectly competitive firm experiences negative economic profits
A) the high barriers to entry prevent further competition. B) that firm exit the industry. C) new firms enter the industry. D) firms have no incentive to exit or enter the industry.