Suppose that Jeanna's income rises. If tomatoes are a normal good, what will happen to the quantity of tomatoes purchased by Jeanna? Is this an income effect, a substitution effect, or both? Explain
What will be an ideal response?
Jeanna will purchase more tomatoes if her income rises because tomatoes are a normal good. This is an income effect. Her income has increased, so she is better off. There is no substitution effect in this case because there is no change in relative prices.
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A) firms could easily get information about price movements and so would not be fooled for very long B) price is negatively related to quantity demanded, but positively related to quantity supplied C) business cycles are relatively brief in duration D) it failed to incorporate rational expectations into its presentation
If an economy produces final output worth $5 trillion, then the aggregate income generated by that production: a. will be $5 trillion
b. will be more than $5 trillion. c. will be $5 trillion minus taxes. d. will be less than $5 trillion. e. will be $5 trillion plus transaction costs.
If the marginal propensity to consume is 4/5 then what must the marginal propensity to save?
a. 2/5 b. 3/5 c. 8/10 d. 1/5
The Environmental Protection Agency was created in
A. the 1930s. B. the 1990s. C. the 1980s. D. the 1960s.