In the above figure, if the budget line shifts from RT to RS, the income effect is illustrated by the move from
A) a to b.
B) a to c.
C) b to c.
D) T to S.
C
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If the income elasticity of demand for a Miami Dolphins season ticket is 2.34, then are Dolphins season tickets a normal or an inferior good?
What will be an ideal response?
What is a budget line? What does its slope indicate?
What will be an ideal response?
A Rolling Stones song goes: "You can't always get what you want." This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?
A) Consumers must make the best purchasing decisions they can, given their limited incomes. B) Workers do not have as much leisure as they would like, given their wages and working conditions. C) Workers in planned economies, such as North Korea, do not have much choice over jobs. D) Firms in market economies have limited financial resources.
Answer the following statements true (T) or false (F)
1. The choice of the most efficient production technique is not affected by how much buyers want to buy the product. 2. In a market system, a consumer's willingness to pay—but not his ability to pay—is based on his income. 3. Even if prices are fixed and competition is restricted by the government, the "invisible hand" will still work in the economy and lead to economic efficiency. 4. In a competitive market economy, firms and resource suppliers seeking to further their own self-interest will end up, as though guided by an "invisible hand," promoting the public interest.