Related to the Economics in Practice on page 36: The results of the survey conducted by Esther Duflo and Abhijit Banerjee found that in extremely poor societies
A. all consumption decisions are made by the government.
B. household choice even plays a role in non-food-related consumption decisions.
C. household choice plays no role in consumption decisions.
D. the only consumption decisions in which household choice plays a role is in the consumption of biological needs such as food.
Answer: B
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The Slutsky equation shows that, holding the total effect constant, the income effect will be larger for goods that
A) have a smaller substitution effect. B) make up a larger percentage of a household's budget. C) have perfectly inelastic demand curves. D) All of the above.
Vertical contracts that aim to decrease retailer prices typically
a. Benefit the consumer, hurt the manufacturer and the retailer b. Benefit the manufacturer, hurt the consumer and retailer c. Benefits the consumers, manufacturers and retailers d. Hurts all the manufacturers, consumers and retailers
The problem causing most recessions is too little
A) money (currency plus checking accounts). B) spending. C) unemployment. D) taxes.
Assuming demand is inelastic, if a firm wants to increase its total revenue, it should raise price
Indicate whether the statement is true or false