If the income elasticity of demand for a good equals to 2.56, a 10 percent increase in consumer income will result in a 2.56 percent increase in the quantity demanded of the good
a. True
b. False
Indicate whether the statement is true or false
False
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Open market operations are conducted by the __________.
Fill in the blank(s) with the appropriate word(s).
It costs $5,000 to produce ten visits and $6,000 to produce 20. At a volume of 20,
A. average cost is $300 and marginal cost is $100. B. average cost is $500 and marginal cost is $100. C. average cost and marginal cost are $300. D. average and marginal cost cannot be calculated from these data.
If average cost is decreasing,
A) marginal cost equals average cost. B) marginal cost exceeds average cost. C) marginal cost is less than average cost. D) Not enough information is given.
Cleantown and Grimyville are identical except for the inferior air quality in Grimyville. All potential residents have identical tastes. Apartments in Cleantown rent for $400 per month. The cost of breathing Grimyville air is $75 per month. The quantity of apartments in each town is fixed.
(i) Explain why an apartment in Grimyville must rent for $325 per month. (ii) Consider the social gain created by Grimyville apartments. How is this social gain divided between the residents and the landlords? (iii) Suppose that the air in Grimyville is brought up to Cleantown standards. Who benefits from the cleaner air?