Assume that a 6 percent increase in income in the economy produces a 3 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is:
A. negative and therefore X is an inferior good.
B. positive but less than one; therefore X is an inferior good.
C. positive and therefore X is an inferior good.
D. positive and therefore X is a normal good.
Answer: D
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Empirical evidence indicates that
a. changes in the earth's cloud cover will clearly enhance the warming effects of carbon dioxide. b. the increase in carbon dioxide, over thousands of years, is clearly the cause of global warming. c. if global warming continues for another century, as most models forecast, the sea levels will clearly rise substantially, imposing costs much larger than the cost of preventing the warming. d. the earth has warmed a little more than one degree Fahrenheit in the past century.
Evidence on the existence of relative PPP shows that:
A) the evidence for relative PPP is scanty and theory is large discredited B) the evidence for relative PPP is hit or miss, and so one should exercise cations in using relative PP to predict changes in exchange rates C) relative PPP is an approximate guide to predicting the relationship between changes in inflation and exchange rates over long periods such as decades d) relative ppp holds nearly perfectly in the short and long run, are used with great accuracy to make predictions
Under a communist system,
A. consumer decisions are not influenced by prices. B. resources are owned and controlled by the government. C. individual freedom is maximized. D. the market guides resources, but the state dictates what should be produced.
If all resources were perfectly adaptable for alternative uses, the production possibilities curve would
A) be bowed out. B) be a loop. C) be a straight line. D) not exist.