The income elasticity of demand for education is 3.5. Thus, a 6% decrease in income will
A. increase the quantity of education demanded by 6%.
B. increase the quantity of education demanded by 21%.
C. decrease the quantity of education demanded by 3.5%.
D. decrease the quantity of education demanded by 21%.
Answer: D
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When a nation imports a good or service, the nation's consumer surplus ________, its producer surplus ________, and its total surplus ________
A) increases; decreases; increases B) increases; decreases; decreases C) increases; increases; increases D) decreases; decreases; decreases E) decreases; decreases; increases
An incentive for managers to maximize profits is:
A. performance bonuses. B. reputation. C. takeovers. D. All of the statements associated with this question are correct.
Which of the following is evidence that consumption depends on total wealth, and not just on current income?
A) People save very little for their retirement. B) The pre-announced phased-in tax cuts of 1981-83 caused little change in consumption in 1981. C) A drop in consumer confidence, with unchanged current income, often causes total consumption spending to fall. D) all of the above E) none of the above
The assumption that people do NOT intentionally make decisions that would leave them worse off is known as
A. the false assumption. B. the rationality assumption. C. the ceteris paribus assumption. D. the normative assumption.